India Proposes Tax Exemptions for Apple Machinery Through 2041

The Government of India proposed a draft amendment to extend tax exemptions until March 31, 2041, for foreign companies providing machinery and equipment to contract manufacturers. The proposal follows lobbying from Apple Inc., which sought to prevent its owned manufacturing equipment from being classified as a business connection that would expose iPhone profits to local income taxes.

These exemptions apply to manufacturers of mobile phones, tablets, laptops, wearables, and hearing devices, including tax breaks for storing components in customs-bonded areas. The broader proposal also simplifies tax exemptions for foreign companies using data center services and suggests 15-year tax exemptions for foreign diamond miners and traders operating in designated trading zones.

These measures aim to provide long-term tax certainty and mitigate supply chain disruptions as companies diversify manufacturing away from China. The move follows India's recent removal of 5% and 7.5% import duties on various electronic components. Data from Counterpoint Research indicates that India is projected to produce 26% of the world's iPhones in 2026, a significant increase from 6% four years ago.