India will allow foreign companies to supply machinery to contract manufacturers in specified customs-bonded zones for five years without triggering income-tax risk tied to a “business connection,” through the 2030–31 tax year.

The government decision applies to factories located in customs-bonded areas, which are treated as outside India’s customs border for certain purposes. The exemption is time-limited to five years and runs through the 2030–31 tax year. Goods sold into India from these facilities would face import duties, making the arrangement primarily suited to export-oriented production.