Apple stands to benefit from India’s proposal to extend key tax exemptions for foreign companies supplying machinery and components to contract manufacturers until March 31, 2041, as the iPhone maker continues to scale up production in the country.
The proposed draft of amendments to the Income-tax Bill was accessed and reported first by Reuters. The draft would give multinational companies greater tax certainty by ensuring that supplying manufacturing equipment to Indian contract manufacturers does not expose their broader business income to Indian taxes. The exemption, introduced earlier this year and originally set to expire in 2031, would now be extended by another decade if approved by Parliament.
Apple’s manufacturing expansion gets policy support
The proposal comes as Apple rapidly expands its manufacturing footprint in India, part of its strategy to reduce dependence on China. The company had previously sought changes to India’s tax framework over concerns that owning machinery supplied to contract manufacturers could create a “business connection” in the country, the report stated. Such a classification could potentially expose part of Apple’s iPhone-related profits to Indian taxation simply because it retained ownership of equipment used by local manufacturing partners.
The proposed extension removes much of that uncertainty, making it easier for Apple and other global electronics companies to continue investing in India’s manufacturing ecosystem. According to Counterpoint Research, India is expected to account for around 26 per cent of global iPhone production in 2026, up from just 6 per cent four years ago.
Tax certainty extended for contract manufacturers
The proposed exemption covers foreign companies supplying machinery used in the manufacture of mobile phones, tablets, laptops, hearing devices and wearable electronics in India. By extending the relief until March 31, 2041, the government aims to provide long-term policy certainty for global manufacturers relying on India’s contract manufacturing ecosystem.The amendments will come into effect only after approval by both houses of Parliament.
Electronics supply chains could become more efficient
The government has also proposed extending tax exemptions until 2041 for foreign companies that store and supply components used by Indian contract manufacturers. The benefit would apply to factories and warehouses located in customs-bonded areas, which are treated as being outside India’s customs territory for specified purposes, Reuters report stated. The arrangement is intended primarily for export-oriented manufacturing, while products entering the domestic market would continue to attract applicable import duties.
The proposal would allow global manufacturers to maintain machinery and critical component inventories closer to production facilities, helping reduce supply-chain disruptions and improve operational flexibility.
Data centre operators also receive tax relief
Beyond manufacturing, the government has reportedly proposed easing tax rules for foreign companies using Indian data centres to provide services to overseas customers. India had earlier announced a tax exemption until 2047 for such companies to address concerns that using Indian data centres could expose their global income to domestic taxation. The latest amendment would allow Indian partners to lease data centres instead of owning them, lowering capital requirements and making it easier for smaller and mid-sized operators to enter the market, Reuters report cited Riaz Thingna, a partner at Grant Thornton Bharat, as noting.