India proposes extending manufacturing tax breaks in boost for Apple supply chain

Details: Manny Pham; Category: Devices & Platforms; 05 August 2026; 238 views

India has proposed extending tax exemptions for foreign companies supplying machinery to electronics contract manufacturers until 2041, in a move to strengthen the country's position as a global manufacturing hub and provide a significant boost to Apple's expanding production operations.

The proposal, introduced as part of the Taxation and Other Laws (Amendment) Bill, 2026, would extend a tax break first introduced in February this year, when the government exempted foreign companies from paying tax on income generated from leasing manufacturing equipment to Indian contract manufacturers until 2031. The latest amendment would extend that deadline by a further 10 years.

The measure is expected to benefit Apple, which had lobbied for the extension to avoid potential tax liabilities linked to machinery used by its manufacturing partners in India. Apple's contract manufacturers in the country include Foxconn and Tata Electronics, as the US technology giant continues shifting production away from China.

The proposed exemption applies to manufacturers of mobile phones, laptops, tablets, wearables and hearing devices. It also covers companies storing and distributing components for these products within customs-bonded warehouses, with the aim of supporting exports and strengthening India's electronics supply chain.

The bill also proposes easing tax rules for foreign companies using Indian data centres by allowing local partners to lease, rather than own, the facilities, reducing capital requirements and making it easier for overseas firms to benefit from existing tax incentives. A separate provision would introduce a 15-year tax exemption for foreign diamond traders operating in designated zones.

According to Reuters, Apple is expected to manufacture around 26% of the world's iPhones in India this year, up from just 6% in 2022, highlighting the country's growing importance within the company's global supply chain. The report added that the proposed reforms are intended to provide greater tax certainty for foreign investors and support Prime Minister Narendra Modi's "Make in India" manufacturing strategy.