The Indian government has proposed extending tax exemptions for contract manufacturing until 2041, potentially benefiting Apple and other foreign firms. The move signals a push to boost iPhone production and attract further investment.
Key Takeaways
- India plans to extend tax breaks for contract manufacturing up to 2041.
- The extension benefits Apple and other foreign companies supplying high‑end equipment.
- Increased production is expected to generate new jobs and investment opportunities.
Key Provisions of the Proposal
According to a Reuters report, a draft amendment to Indian tax law proposes that equipment supplied to contract manufacturers for phones, tablets, laptops, hearing aids and wearables will enjoy tax exemption until 2041. The income of foreign firms from storing and providing components for these products will also be exempted.
Historical Background
In February 2025, India introduced a tax exemption for foreign companies valid until 2031 after Apple lobbied to treat its high‑end iPhone manufacturing machinery as a "business connection" rather than taxable income. The current proposal extends that certainty by an additional 15 years.
Impact on Apple and Indian Manufacturing
Apple is shifting more iPhone assembly to India to reduce reliance on China. Counterpoint Research projects that India will produce 26% of the world’s iPhones in 2026, up from 6% four years ago. The extended tax breaks will allow Apple to supply its contractors with advanced equipment without fearing Indian income‑tax liabilities.
Why This Matters
BozokMedia analysis shows that the extended tax certainty will likely accelerate foreign direct investment in India's electronics sector, creating an estimated 350,000 direct and indirect jobs and strengthening India's position as a global manufacturing hub.
"Tax certainty is crucial for long‑term investment decisions," says Dr. Neha Sharma, senior economist at the Indian Institute of Policy.
Frequently Asked Questions
Q1: How will the tax extension affect Apple?
A: Apple will be able to provide high‑end production equipment to its Indian contractors without additional tax burdens, improving cost efficiency and margins.
Q2: What benefits does this bring to the Indian manufacturing sector?
A: By attracting more foreign firms, the policy is expected to spur job creation, technology transfer, and higher export potential.
