India Extends Tax Breaks to 2041 for Apple's Manufacturing Partners

Apple's years-long push to secure tax certainty in India appears to be paying off. New Delhi has drafted amendments that would push back the expiry of a key tax exemption for foreign companies supplying manufacturing equipment to Indian contract manufacturers - from 2031 all the way to March 2041, reuters reported according to draft legislation reviewed by it.

The timing lines up with Apple's growing bet on India as a manufacturing base. Counterpoint Research estimates India will produce 26% of the world's iPhones in 2026, up sharply from just 6% four years ago, as the company works to reduce its manufacturing dependence on China.

The underlying issue dates back to earlier this year. When Apple ships high-end iPhone assembly equipment to its Indian contract manufacturers, it technically retains ownership of that machinery. In China, this arrangement doesn't create tax complications - but Apple worried Indian law might treat it differently, potentially classifying the equipment ownership as a "business connection" that could subject the company's iPhone profits to Indian taxation. After Apple lobbied on the issue, India carved out an exemption in February, though it was initially set to lapse in 2031. The new draft simply extends that runway by another decade.

Beyond Apple specifically, the exemption's scope covers equipment supplied to manufacturers of phones, tablets, laptops, and wearable or hearing devices - meaning any qualifying foreign supplier benefits, not just Apple. For it to take effect, the bill still needs to clear both chambers of India's parliament.

A parallel exemption addresses component storage: foreign companies that stock and supply parts to electronics contract manufacturers would also get tax-free treatment through 2041, provided the storage happens in customs-bonded zones - facilities legally treated as sitting outside India's customs territory. That structure only pays off for exporters, since anything sold domestically from these bonded facilities would still trigger import duties.

The government is also loosening rules around a separate, unrelated tax break tied to data centers. Back in February, India exempted foreign firms using domestic data centers to serve overseas clients from tax through 2047, aiming to reassure companies that their global income wouldn't later get pulled into India's tax net simply because they used local infrastructure. The latest draft goes a step further by letting these data centers be leased rather than requiring ownership by an Indian partner - lowering the barrier for foreign firms to qualify.