India has proposed extending tax relief for foreign companies supplying machinery and components to local contract manufacturers.
The move could provide long-term tax certainty to Apple as it expands iPhone production in the country.
Highlights
- India may extend key tax exemptions for foreign manufacturers until March 31, 2041.
- The existing exemption was scheduled to expire in 2031.
- Apple could gain greater tax certainty for machinery supplied to its Indian manufacturing partners.
- The proposal covers mobile phones, laptops, tablets, wearables and hearing devices.
- Foreign suppliers may also store components near factories in customs-bonded areas.
- The amendments will require approval from both Houses of Parliament.
Apple could emerge as a major beneficiary of India’s proposal to extend tax exemptions for foreign companies supplying manufacturing machinery and components to Indian contract manufacturers until March 31, 2041.
The proposed amendments to the Income-tax Bill are aimed at giving global manufacturers greater certainty over their tax liabilities in India. Under the proposal, foreign companies supplying equipment to Indian manufacturing partners would not automatically expose their wider global business income to Indian taxation.
The exemption was introduced earlier in 2026 and was originally scheduled to remain valid until 2031. The government is now reportedly considering extending it by another 10 years to support long-term investment in India’s electronics manufacturing sector.
The proposal is particularly important for Apple, which has been steadily increasing iPhone production in India as part of its strategy to diversify manufacturing beyond China. Apple works with contract manufacturers in India but often retains ownership of specialised machinery used in their factories.
Earlier, there were concerns that ownership of such equipment could create a “business connection” for Apple in India. This could potentially allow tax authorities to claim taxes on a portion of the company’s global profits linked to iPhone manufacturing.
The proposed amendment is expected to remove much of this uncertainty. It could encourage Apple and other multinational electronics companies to invest more confidently in India’s manufacturing ecosystem.
The tax relief would cover machinery used to manufacture mobile phones, tablets, laptops, hearing devices and wearable electronics. It may also apply to foreign companies storing and supplying components from factories and warehouses located in customs-bonded zones.
These areas are treated as being outside India’s customs territory for certain purposes. Imported components used for export manufacturing may receive tax benefits, while products sold in the domestic market would continue to attract applicable duties.
Keeping machinery and critical components closer to manufacturing units could reduce delivery delays and supply-chain disruptions. It may also allow electronics companies to respond more quickly to changing production requirements.
The government has also reportedly proposed easing tax rules for foreign firms using Indian data centres to serve overseas customers. However, all the proposed amendments will take effect only after receiving Parliament’s approval.
