India has proposed extending tax exemptions until 2041 for foreign companies such as Apple that provide machinery to contract manufacturers, reports Reuters.
This would be a big win for the tech company. India has been a key market for Apple as it diversifies iPhone manufacturing beyond China. Smartphone production in India rose 28-fold over the last decade to 5.45 trillion rupees (US$57 billion) in 2024/25, according to Counterpoint Research.
According to a draft of the proposed tax amendments seen by Reuters, “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.
India introduced the tax exemption for foreign companies in February, valid only until 2031, after Apple lobbied the Indian government to modify its income tax laws to ensure the company is not taxed for ownership of the high-end iPhone machinery it provides to its contract manufacturers.
According to Reuters, Apple had feared that, unlike in China, tax laws in India could treat ownership of machinery supplied to its contract manufacturers as so-called “business connection”, exposing its iPhone profits to tax.
Last month India scrapped import duties on some parts used to make mobile phones and other electronic devices, removing the current 7.5% and 5% levies, which will help companies like Apple. Here are details:
- Items include key parts for producing wireless charging modules for mobile phones, displays for medical devices and automobiles, and lithium-ion cells.
- The exemption will be valid until March 31, 2029.
- “This should boost cost competitiveness, domestic value addition and localization of high-value smartphone and electronics manufacturing,” said Manoj Mishra, a partner at business consultancy Grant Thornton Bharat.
India aims to expand electronics manufacturing to $500 billion by fiscal year 2030.
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