India has proposed extending key contract-manufacturing tax exemptions by another decade, offering Apple and other global electronics companies greater certainty as they shift more production and supply-chain activity into the country.
The draft amendments would exempt foreign companies supplying machinery to Indian contract manufacturers from related tax exposure until March 31, 2041.
Apple Gains Longer-Term Tax Certainty
India introduced the machinery-related exemption in February 2026, but the original measure was scheduled to expire in 2031.
According to Reuters, Apple had urged the Indian government to change its income-tax rules because the company supplies expensive, specialized equipment to the manufacturers that assemble its devices.
Indian authorities could otherwise treat Apple’s ownership of machinery used by local contractors as a “business connection,” potentially exposing a portion of the company’s iPhone profits to taxation.
The proposed 2041 deadline would give Apple a much longer planning horizon when deciding whether to place additional production equipment in India. It could also reduce the financial pressure on contractors that might otherwise need to purchase costly machinery themselves.
India’s Share of Global iPhone Production Climbs
The proposal arrives as India becomes increasingly important to Apple’s effort to diversify manufacturing beyond China.
Reuters reported, citing Counterpoint Research, that India is expected to manufacture 26% of the world’s iPhones in 2026, compared with only 6% four years earlier.
Firstpost framed the longer exemption as a direct boost to Apple’s expanding Indian operations, allowing the company to approach contract manufacturing with greater tax predictability.
The policy could strengthen India’s position not only as a location for assembling devices, but also as a base for the equipment, warehousing and component flows needed to support large export operations.
Exemption Covers Phones, Laptops and Wearables
The proposed relief would extend beyond iPhones.
The draft bill covers contract manufacturing for mobile phones, tablets, laptops, hearing devices and wearable electronics. The legislation must still pass both houses of India’s parliament before taking effect.
India would also exempt foreign companies’ income from storing and supplying eligible electronics components to contract manufacturers until 2041.
The component rules would apply to factories and warehouses in customs-bonded areas, which are treated as being outside India’s customs border. Products sold domestically from these facilities would still face import duties, making the structure more attractive for export-focused manufacturing.
Changes Aim to Protect Electronics Supply Chains
Riaz Thingna, a partner at Grant Thornton Bharat, said the proposal would allow foreign businesses to store and transfer important equipment and components to their Indian manufacturing partners.
Thingna shared that the changes could reduce supply-chain disruption caused by trade uncertainty while providing companies with greater tax certainty.
India also proposed making its separate data-center tax incentive easier to use. A tax exemption through 2047 already applies to foreign companies using Indian data centers to serve international customers, while the new bill would permit their Indian partners to lease facilities rather than own them.
For Apple, the contract-manufacturing extension is the more immediate prize. It removes a long-term tax concern from the machinery model behind iPhone production and gives the company a stronger foundation for expanding India’s role in its global supply chain.
