![\"Government](\"https:\/\/static.toiimg.com\/thumb\/msid-132833322,imgsize-614155,width-400,height-225,resizemode-4\/forex.jpg\" "\\"Offshore")
<\/div>\n<\/div>\n<\/div>\nThe government has proposed a major easing of the eligibility norms for Eligible Investment Funds (EIFs) managed from India as part of its efforts to establish the country as a global fund management hub. Under the Taxation and Other Laws (Amendment) Bill, 2026, offshore funds seeking tax exemption on their global income will no longer have to comply with conditions such as maintaining at least 25 investors, limiting any single investor’s participation to 10%, restricting investments of more than 25% of the corpus in one entity, avoiding investments in associate entities, or maintaining a minimum average monthly corpus of Rs 100 crore.The Bill, which has been circulated among Members of Parliament, is expected to be introduced in the Lok Sabha shortly by Finance Minister Nirmala Sitharaman<\/a>.It also proposes to remove the separate exemption criteria applicable to funds operating from the International Financial Services Centre (IFSC). The move is aimed at eliminating the current distinction between IFSC and non-IFSC offshore funds by creating a common eligibility framework for all investment funds managed from India. “These proposed changes are expected to significantly enhance the attractiveness of India’s onshore fund management ecosystem for offshore funds and facilitate greater relocation of offshore fund management activities to India,” said Abheet Sachdeva, Partner- M&A Tax, Nangia Global according to a PTI report.In addition, the Bill seeks to replace the Ordinance issued on June 5, which granted tax exemption on interest income and capital gains earned by foreign portfolio investors (FPIs) from investments in government securities (G-Secs).The Ordinance was introduced to attract foreign capital and ease pressure on the rupee, which had come under strain during the West Asia crisis.According to the Statement of Objects and Reasons accompanying the Bill, the Ordinance was issued to mitigate the impact of external economic shocks, preserve domestic economic stability and support sectors affected by prevailing global conditions by amending certain provisions of the Act.“Subsequent policy assessment in view of representations received from stakeholders after the enactment of the Finance Act, 2026 has indicated that, while the objective sought to be achieved through the Ordinance continues to remain relevant, additional taxation measures are necessary to comprehensively achieve the same objective.“Further, having regard to the continuing global developments and the need for a timely and coherent response, it is considered appropriate to incorporate these measures in the present Bill itself,” it said.According to Abheet Sachdeva, Partner\u2013M&A Tax at Nangia Global, the proposed amendments are likely to make India’s onshore fund management ecosystem far more attractive for offshore funds and encourage a greater shift of offshore fund management operations to the country.In June, Finance Minister Nirmala Sitharaman had said that the measures announced by the Reserve Bank of India (RBI) and the government to boost foreign capital inflows represented the “first step” in bringing overseas investment back to India, while indicating that additional initiatives could follow.“We recognise, we need more foreign capital to come in,” Sitharaman had said.As part of these efforts, the government on June 5 broadened the list of securities eligible under the Fully Accessible Route (FAR) by including new issuances of government securities (G-Secs), with the aim of reducing compliance requirements for foreign investors.On the same day, the RBI permitted banks to access its swap facility for Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits with maturities of three to five years until September 30. The facility enables banks to swap US dollar deposits with the RBI, helping them manage currency risk.To further support foreign capital inflows, the government also introduced a concessional foreign exchange swap facility to encourage public sector undertakings (PSUs) to raise external commercial borrowings (ECBs) until September 30.Together, these initiatives had attracted net inflows of $40.81 billion as of July 31.India’s foreign exchange reserves increased by $6.118 billion to $682.354 billion during the week ended July 24, reflecting the pickup in foreign capital inflows.Richa Sawhney, Partner\u2013Tax at Grant Thornton Bharat, said the Bill represents a gradual transition from short-term policy support to a framework aimed at improving India’s long-term competitiveness.She said that while the Ordinance was introduced to address immediate challenges arising from global economic developments, the government has since supplemented it with additional tax reforms following consultations with stakeholders. According to her, the outcome is a broader package that enhances tax certainty while strengthening the country’s economic resilience.“The liberalisation of the fund management regime, incentives for electronics supply chains, facilitation measures for data centres and diamond trading and tax relief for foreign investors in Government securities collectively point towards a policy objective of attracting global capital and business activity into India. Collectively, the amendments reflect a clear emphasis on investment facilitation, supply-chain resilience and long-term tax certainty,” Sawhney said.The Statement of Objects and Reasons accompanying the Bill said the Ordinance became necessary because recent geopolitical developments and the resulting disruptions to global trade and supply chains had created considerable uncertainty in the international economy.“Hence, a need has arisen to undertake certain immediate taxation measures with a view to mitigate the impact of external economic shocks, ensure stability in the domestic economy and support key sectors affected by the prevailing global conditions, which require certain amendments to the provisions of the said Act to be carried out on an urgent basis in the larger public interest,” it said.<\/div>\n