India Plans to Extend Apple Manufacturing Equipment Tax Break Through 2041

India is moving to extend a key tax break that benefits Apple's manufacturing expansion in the country, proposing to keep the exemption in place through 2041, according to a draft tax amendment seen by Reuters. The extension would give Apple and other foreign electronics firms long-term certainty as they continue diversifying manufacturing beyond China.



The tax break was first introduced in February and was set to expire at the end of March 2031. Apple had lobbied India to modify its income tax laws after raising concerns it could be taxed on the high-end iPhone manufacturing equipment it owns and supplies to its contract manufacturers. The company feared India might treat that equipment as a so-called "business connection," exposing its iPhone profits to local taxation.


India is on track to assemble 26 percent of the world's iPhones in 2026, up from just 6 percent four years ago, according to Counterpoint Research, underscoring the country's rapidly expanding role in Apple's global supply chain.

The proposed extension applies to manufacturers of mobile phones, tablets, laptops, hearing devices, and wearables. The bill also exempts foreign companies from tax on income generated from storing and supplying components for electronics manufacturing until 2041, provided those operations take place in customs-bonded areas. Goods sold domestically from these zones would still attract import taxes.

Riaz Thingna, a partner at Grant Thornton Bharat, told Reuters the changes would allow 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.

The draft legislation also includes provisions to make it easier for foreign companies using Indian data centers to benefit from existing tax exemptions by allowing their Indian partners to lease, rather than own, the facilities. This could lower capital requirements for smaller players entering the market.


The proposal follows another recent tax policy win for Apple. Earlier this month, India eliminated import duties on several key smartphone components, including lithium-ion cells and parts for wireless charging modules. The latest draft bill now heads to both houses of parliament for consideration.