How do targeted tax incentives for data centres and electronics manufacturing support the Make in India initiative? Discuss with recent legislative examples.

Make in India seeks to raise manufacturing's share in GDP by making domestic production cost-competitive. Tax incentives are the fiscal arm of this push: by lowering the effective tax cost of locating capacity in India, they shift investment decisions of global firms in India's favour. The Taxation and Other Laws (Amendment) Act, 2026 — amending the Income-tax Act, 2025, the Finance Act, 2026 and the Payment and Settlement Systems Act, 2007 [1] — illustrates the design.

Data centres: anchoring digital infrastructure

• The Income-tax Act exempts income of specified foreign companies procuring services from Indian data centres; the 2026 amendment removed the requirement of a case-specific central government notification for both the foreign company and the facility [1].
• It widened "specified data centre" to cover facilities run on a lease basis, not only owner-operated ones [1] — expanding the eligible supplier base and letting global cloud demand be served from Indian soil rather than offshore.
• Effect: tax certainty substitutes for discretionary approval, the key demand of capital-intensive, long-gestation infrastructure.

Electronics manufacturing: deepening the value chain

• The exemption for foreign suppliers of capital goods to Indian electronic contract manufacturers (phones, laptops, servers) was extended from 2030-31 to 2040-41 [1], covering the machinery-import stage where duty and tax incidence bites hardest.
• This complements PLI-type incentives, moving India from assembly towards component and equipment-based production [2].

Limits

• Exemptions narrow the tax base and risk round-tripping; hence anti-abuse conditions were retained even while fund-manager conditions were relaxed [1].
• Incentives cannot substitute for power, land and skilling costs, the binding constraints in both sectors.

Targeted, time-bound and rule-based incentives thus work best as a supplement to structural reform, not a substitute. Passed as a Money Bill with the stated aim of enhancing ease of doing business [3], the 2026 Act shows the direction: predictable law over discretionary approval, which is what durably converts policy intent into factories, servers and jobs.