India allows foreign firms to fund equipment
Change
India allowed foreign companies to provide machines to their contract manufacturers in customs-bonded areas for five years without tax risk.
Why it matters
Relief applies only to factories established in customs-bonded areas, which are treated as outside India’s customs border. The tax-safe status covers equipment provided by foreign companies to their contract manufacturers. The provision runs through the 2030-31 tax year. Devices sold within India from those bonded facilities will attract import taxes.
Implications
- • Foreign suppliers can fund manufacturing equipment for contract manufacturers in customs-bonded areas without creating an Indian tax obligation during the relief period.
- • Contract manufacturers using bonded-area equipment will face import duties on any devices sold into the Indian domestic market, preserving an export-focused structure for those facilities.
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