The Indian government is considering giving tax reliefs to Saudi Arabia’s sovereign wealth fund – Public Investment Fund (PIF) to encourage it to invest $100 billion in India’s energy and infrastructure sectors. This would include special tax breaks that could last for up to 10 years. Tax holiday on profits is granted under the Section 80IA of the Income-tax Act, 1961.
Apparently, the government is also looking into streamlining procedures for PIF to make it easier for them to claim tax breaks on dividends, interest, and long-term capital gains (LTCGs) from their investments. This is granted under the Section 10 (23FE) of the Income-tax Act, 1961.
This is part of a bigger effort to enhance economic ties between India and Saudi Arabia. PIF is one of the world’s largest sovereign investment funds, which manages around $925 billion in assets. However, its exposure in India is still relatively low.
“Saudi Arabia wants tax exemption for their investments in infrastructure assets in India, including refineries. It is likely to get wider exemptions, the details are being worked out,” the Financial Express quoted an official as saying.
India-Saudi Relations
As of FY24, India was the second largest trading partner for Saudi Arabia, and Saudi Arabia was India’s fifth largest trading partner.
According to the Press Information Bureau (PIB), in FY24, India imported goods worth $31.42 billion from Saudi Arabia and exported goods worth $11.56 billion to Saudi Arabia. This brought the total bilateral trade between the two countries to $42.98 billion.
Two weeks ago, on April 22, 2025, Prime Minister Narendra Modi visited Saudi Arabia. During this visit, both New Delhi and Riyadh mutually agreed to strengthen their cooperation, improve their bilateral trade and investments, and deepen their strategic partnership.
This visit came after Saudi Crown Prince Mohammed Bin Salman’s visit to India in September 2023 to participate in the G-20 Summit and co-chair the first meeting of the India-Saudi Arabia Strategic Partnership Council. External Affairs Minister S Jaishankar had also visited Riyadh in September 2024 to co-chair the first India-Gulf Cooperation Council (GCC) Ministerial meeting.
Apart from this, a high-level task force (HLTF) was established by the two countries in 2024 to rapidly promote such investment flows in areas, such as infrastructure, manufacturing, energy, petrochemicals, fintech, digital infrastructure, pharmaceuticals, health, technology, and telecommunications.
