India Proposes Tax Exemptions for Foreign Machinery Providers Until 2041

The Government of India has proposed extending tax exemptions until March 31, 2041, for foreign companies that provide machinery to contract manufacturers. The proposal specifically targets manufacturers of laptops, tablets, mobile phones, and wearable electronic devices. It also includes tax breaks for storing components in customs-bonded areas and simplifies exemptions for foreign companies utilizing data center services.

These measures follow lobbying from Apple Inc., which sought to ensure that the ownership of high-end iPhone machinery is not classified as a business connection. Under current interpretations, such a classification could expose the company's profits to Indian taxes. The government's move aims to provide tax certainty and prevent supply chain disruptions as Apple continues to shift its production operations from China to India.

Beyond the technology sector, the proposal suggests a 15-year tax exemption for foreign diamond traders and miners who operate through designated trading zones.