India is considering a significant extension of tax exemptions for foreign electronics companies, a move that could substantially benefit Apple as it ramps up iPhone production in the country. The proposed amendment to tax laws would push the current incentives’ expiration date from 2031 to March 31, 2041, offering long-term fiscal certainty for global manufacturers.
If approved by both houses of Parliament, the measure would extend tax breaks for foreign companies supplying machinery and components to contract manufacturers. This aligns with India’s broader strategy to solidify its position as a global electronics manufacturing hub, particularly under the ‘Make in India’ initiative.
Apple Poised to Gain from Extended Tax Relief
According to reports, Apple stands to benefit the most from this proposal. The tech giant had been seeking clarity on India’s tax regime concerning the supply of expensive equipment to its contractors, as ambiguity exposed it to higher tax risks. Under the proposed reforms, foreign firms supplying equipment used in manufacturing phones, tablets, laptops, wearables, and hearing aids would continue to enjoy tax exemptions until 2041.
The draft also extends tax relief on income derived from storing and supplying electronic components through customs-bonded facilities, encouraging export-oriented manufacturing.
India’s Electronics Manufacturing Strategy
This tax extension is part of the government’s efforts to attract global manufacturers and reduce dependence on China. Apple’s manufacturing footprint in India has grown rapidly, with Counterpoint Research projecting that India will produce 26% of the world’s iPhones in 2026, up from just 6% four years ago. Industry experts believe the extended incentives could prompt more multinational electronics companies to invest in local production facilities and strengthen supplier networks.
“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, a partner at Grant Thornton Bharat.
Wider Business Reforms in the Pipeline
Beyond electronics, the proposed bills aim to improve India’s overall investment climate. For instance, foreign companies using data centers in India to serve global clients would no longer be required to own those facilities, but could lease them instead. Additionally, the bills recommend a 15-year tax exemption for foreign diamond miners and dealers operating through designated trading zones. Analysts say these measures are designed to enhance ease of doing business and provide long-term policy certainty for international investors.
All these changes are subject to parliamentary approval and would take effect only after the bills are passed.