Other BriefingsIndia Offers Tax Relief for Foreign Tech Experts to Boost Electronics Manufacturing Sector
In a move aimed at accelerating growth in the electronics manufacturing sector, India has introduced a tax relief measure for highly skilled foreign engineers, tech experts, and support teams. This new policy will allow companies to bring in specialists, including those from China, for short-term assignments without facing complex tax obligations.
India has introduced a tax relief plan for skilled foreign engineers, tech experts, and support teams. This new policy makes it easier for companies to bring in specialists, including those from China, for short-term work without dealing with complicated tax rules. Under the proposed presumptive taxation system, only 25 percent of the income earned by these professionals while working in India will be taxed.
Industry executives believe that the new taxation framework, announced by Finance Minister Nirmala Sitharaman in the Union Budget 2025-26, will provide much-needed relief to foreign professionals and the companies relying on their expertise.
Expanding India’s electronics manufacturing: Addressing challenges for foreign expertise
As India continues to expand its electronics manufacturing ecosystem, there is a growing need for thousands of foreign experts to assist in setting up and maintaining factories and training local workers. Previously, the taxation policies for foreign professionals lacked clarity, requiring them to file tax returns if their stay in India exceeded 90 days. Many experts hesitated to work in India due to high tax rates and regulatory hurdles, creating a barrier for companies seeking international expertise.
India’s predictable tax roadmap to support industries and GVCs
Alongside the presumptive taxation scheme, India has introduced a predictable tax roadmap to support its industries and global value chains (GVCs) over the next decade. This framework, similar to a long-term advance pricing agreement (APA), will enable global component and sub-assembly suppliers to store their goods in India without concerns about unpredictable tax liabilities in the future. Industry leaders view these tax reforms as subtle yet highly impactful, especially for the electronics sector and GVCs, which have often found India’s tax structure less competitive compared to China and Vietnam.
The changeability of India’s tax regime has been a major risk factor for investment, and these reforms are expected to address such concerns.
According to the India Cellular and Electronics Association (ICEA), swift implementation of these tax measures is crucial to enhancing India’s long-term competitiveness and ability to scale up manufacturing. In a news report published on February 9, 2025, the ICEA chairman called it the first step in shifting supply chains and creating new opportunities for the domestic electronics industry.
Tariff cuts to boost smartphone, battery manufacturing
Beyond tax reforms, India has also announced the removal of a 2.5 percent tariff on essential smartphone components, including PCBAs, camera modules, connectors, wired headsets, microphones, receivers, USB cables, and fingerprint scanners on February 1, 2025. Additionally, imports of capital goods for lithium-ion battery production have been made tax-free, further supporting growth in this emerging sector. These tariff reductions were announced in the latest edition of the union budget after consultation with the Ministry of Electronics and IT (MeitY), and industry stakeholders, ensuring that they boost manufacturing without negatively impacting domestic jobs.
India’s electronics sector has witnessed rapid growth, particularly following the introduction of the Production-Linked Incentive (PLI) scheme, first introduced on April 1, 2020. In 2023, India’s electronics production reached US$102 billion, supported by a component and sub-assembly demand of US$45.5 billion.
According to data from the MeitY, electronics exports have surged from INR 382.6 billion (US$4.5 billion) in 2014-15 to INR 2.41 trillion (US$28.45 billion) in 2023-24, reflecting a CAGR of 22.7 percent. In addition, mobile phone exports have also surged from INR 15.66 billion (US$184.9 million) in 2014-15 to INR 1.2 trillion (US$14.1 billion) in 2023-24—a 77-fold increase.
Conclusion
With these latest policy measures, India aims to further strengthen its position as global electronics manufacturing hub, attracting investment and increasing the country’s role in the global supply chain.
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