India is making multiple efforts to improve foreign trade and ease of doing business. The Union Budget provided forward-looking proposals, including measures to attract foreign investment and other business-friendly steps. The journey to spotlight India as an arbitration hub continues with some key recent developments. The highlight of the month was the Global AI Impact Summit, which led to the adoption of the New Delhi Declaration.
Union Budget – The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman presented the Union Budget 2026-2027 in Parliament. Some of the key proposals relating to foreign investment are:
- Any foreign company that provides cloud services to customers globally using data centre services from India will be granted a tax holiday until 2047. She added that a safe harbour of 15 per cent on costs is to be provided if the company providing data centre services from India is a related entity. Moreover, a safe harbour will be provided to non-residents for component warehousing in a bonded warehouse, with a profit margin of 2 per cent of the invoice value.
- A comprehensive review of the Foreign Exchange Management (Non-debt Instruments) Rules to create a more contemporary, user-friendly framework for foreign investments, consistent with India’s evolving economic priorities.
- Provide an exemption to any foreign company that provides capital goods, equipment and tooling to any toll manufacturer in a bonded zone who is engaged in the manufacturing of electronic goods. The exemption is proposed for a period of five tax years beginning on 1 April 2026.
- Roll out a loan-linked capital subsidy support scheme for the establishment of veterinary and para-vet colleges, veterinary hospitals, diagnostic laboratories and breeding facilities in the private sector. Collaboration between Indian and foreign institutions will also be facilitated.
In July 2024, a comprehensive review of the Income Tax Act, 1961, was announced. This was completed in record time, and the Income Tax Act, 2025, will come into effect from 1 April 2026.
Arbitration Hub – Over the past decade, the Government of India has undertaken various initiatives to position India as an arbitration hub. These include amendments to the Arbitration and Conciliation Act, 1996, carried out in 2015, 2019, and 2021. These amendments aim to ensure the timely conclusion of arbitration proceedings, the neutrality of arbitrators, minimal judicial intervention in the arbitral process, and the quick enforcement of arbitral awards. The amendments also promote institutional arbitration, update the law to reflect global best practices, and resolve ambiguities—helping to establish an ecosystem in which arbitral institutions can flourish.
The India International Arbitration Centre Act, 2019, has been enacted, establishing the India International Arbitration Centre as an independent and autonomous body to facilitate institutional arbitration, including international commercial arbitration. The Centre provides world-class arbitration services through its facilities at cost-effective rates, including reputable empanelled arbitrators and the requisite administrative support for the smooth conduct of arbitral proceedings. The Centre is envisaged to become a model arbitral institution in the country, thereby enhancing the quality of the country’s arbitration institutional framework.
Ease of Doing Business – Following the discontinuation of the DBR Report in 2020, the World Bank launched the B-Ready Assessment in 2024 to evaluate more than 180 countries over three years across 10 topics spanning the entire business lifecycle: Business Entry, Business Location, Utility Services, Labour, Financial Services, International Trade, Taxation, Dispute Resolution, Market Competition, and Business Insolvency. India will be included in the third B-Ready Report, scheduled for release in 2026. With a view to improving India’s business climate, attracting investments, and fostering economic growth, the Department for Promotion of Industry and Internal Trade (DPIIT) has launched several initiatives, including the Business Reforms Action Plan (BRAP), under the overall Ease of Doing Business umbrella.
AI Impact Summit – The AI Impact Summit 2026, held in New Delhi on 18–19 February, concluded with the adoption of the New Delhi Declaration on AI Impact, marking a significant milestone in global cooperation on artificial intelligence. The declaration has been endorsed by 92 countries and international organisations, reflecting a broad-based global consensus on leveraging AI for economic growth and social good. Guided by the principle of “Sarvajan Hitaya, Sarvajan Sukhaya” (Welfare for all, Happiness for all), the declaration underscores that the benefits of AI must be equitably shared across humanity. It emphasises:
- Strengthening international cooperation and multistakeholder engagement
- Respecting national sovereignty
- Advancing AI through accessible and trustworthy frameworks
The declaration is structured around seven key pillars, forming the foundation of global AI cooperation:
- Democratising AI Resources
- Economic Growth and Social Good
- Secure and Trusted AI
- AI for Science
- Access for Social Empowerment
- Human Capital Development
- Resilient, Efficient and Innovative AI Systems
India – United States Interim Agreement – The United States of America and India announced that they have reached a framework for an interim agreement on reciprocal and mutually beneficial trade.
