Apple is set to receive another boost for its growing manufacturing business in India after the government proposed extending a key tax exemption for foreign companies that supply machinery and equipment to contract manufacturers. The proposal would push the benefit from its current 2031 expiry date to March 31, 2041, giving companies more certainty as they expand production in the country.
Reuters reports that the draft amendment covers manufacturers of mobile phones, tablets, laptops, hearing devices, and wearable electronics. The proposal still requires approval from both houses of India’s Parliament before it becomes law.
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“To provide (tax) certainty” the government has extended tax breaks until March 31, 2041 to foreign companies that provide equipment to their contract manufacturers in India.
Apple had urged the Indian government to introduce this exemption because it owns high-end iPhone manufacturing equipment used by its contract partners. Without the tax break, Indian tax rules could have treated that ownership as a business connection, exposing part of Apple’s profits to income tax in India.
Proposal also expands benefits for electronics supply chain
The draft amendment also exempts income earned by foreign companies from storing and supplying electronic components to contract manufacturers until 2041, provided those operations take place in customs bonded areas that mainly support exports. Products sold inside India from these facilities would still attract import duties.
“The proposed tax changes will enable foreign companies to store and transfer critical equipment and components in India for their contract manufacturers, helping mitigate supply chain disruptions arising from trade uncertainties while providing greater tax certainty,” said Riaz Thingna, partner at Grant Thornton Bharat.
The proposal comes weeks after India removed import duties on several smartphone components, further strengthening its position as a major Apple manufacturing hub. According to Counterpoint Research, India is expected to produce 26% of the world’s iPhones in 2026, compared with just 6% four years ago as Apple continues to expand production beyond China.
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