India has proposed extending a key tax exemption for foreign companies supplying machinery to contract manufacturers until March 31, 2041, a move expected to provide a significant boost to Apple’s expanding manufacturing operations in the country. The proposal, included in the draft Taxation and Other Laws (Amendment) Bill, 2026, aims to provide long-term tax certainty for global electronics manufacturers as India strengthens its position as a major production hub for smartphones, laptops, tablets, and other electronic devices.
The extension builds on a tax relief first introduced in February 2026, which was originally valid until 2031. Apple had sought changes to India’s tax framework to ensure that ownership of expensive manufacturing equipment supplied to its contract manufacturers would not create a taxable “business connection” in India. The proposed amendment would remove that uncertainty for another decade, supporting Apple’s strategy to diversify production beyond China.
India Proposes Tax Exemption Extension Until 2041
Under the draft amendments:
- The tax exemption for foreign companies supplying machinery to contract manufacturers would be extended from 2031 to March 31, 2041.
- The measure is intended to provide long-term tax certainty and encourage continued investment in electronics manufacturing.
- The proposal still requires approval by both Houses of Parliament before becoming law.
Proposal Snapshot
| Item | Details |
|---|---|
| Proposal | Extension of tax exemption for foreign equipment suppliers |
| New Validity | Until March 31, 2041 |
| Current Expiry | 2031 |
| Key Beneficiary | Apple and other global electronics companies |
| Status | Draft legislation awaiting parliamentary approval |
Why Apple Stands to Benefit
Apple’s India business has already been expanding rapidly, with Apple India’s FY26 revenue growing 20% to nearly ₹1 lakh crore.
Apple supplies sophisticated manufacturing equipment to its contract manufacturers in India, including facilities operated by partners assembling iPhones.
Before the exemption:
- Ownership of this equipment could potentially create a taxable presence in India.
- Apple risked facing tax on profits linked to machinery deployed at Indian manufacturing facilities.
The proposed extension ensures foreign companies can continue supplying production equipment without triggering those tax concerns, making India a more attractive manufacturing destination.
India has become increasingly important to Apple’s global supply chain as the company accelerates efforts to diversify manufacturing outside China. According to Counterpoint Research, India is expected to produce 26% of the world’s iPhones in 2026, compared with just 6% four years earlier.
Broader Support for Electronics Manufacturing
India’s electronics export momentum has been building too, as Apple led India’s record $9.8 billion smartphone export growth in the first quarter.
The proposed tax relief extends beyond smartphones.
It covers foreign companies supplying equipment for manufacturing:
- Mobile phones.
- Tablets.
- Laptops.
- Wearable electronic devices.
- Hearing devices.
The bill also proposes extending tax exemptions for foreign companies that store and supply components to contract manufacturers through customs-bonded warehouses, helping improve supply chain efficiency while supporting export-oriented manufacturing.
Sectors Covered
| Industry | Eligible Products |
|---|---|
| Consumer Electronics | Smartphones, tablets, laptops |
| Wearables | Smartwatches and wearable devices |
| Medical Electronics | Hearing devices |
| Manufacturing Supply Chain | Equipment and components for contract manufacturers |
Additional Tax Changes
Alongside the manufacturing proposal, the government has introduced other measures to attract foreign investment.
These include:
- Allowing foreign companies using Indian data centres to access tax benefits even when facilities are leased rather than owned.
- A proposed 15-year tax exemption for eligible foreign diamond miners and traders operating through designated trading zones in India.
These changes are aimed at strengthening India’s appeal as a global manufacturing, technology, and logistics hub.
Why the Proposal Matters
The extension reflects India’s broader strategy to attract multinational manufacturers relocating or diversifying production away from China.
Potential benefits include:
- Greater certainty for long-term manufacturing investments.
- Increased foreign direct investment in electronics.
- Expansion of export-oriented production.
- Stronger integration into global supply chains.
- Continued growth of India’s electronics manufacturing ecosystem.
For Apple, the proposal reduces tax-related uncertainty around one of its fastest-growing manufacturing bases, supporting the company’s long-term expansion plans in India.
Looking Ahead
The proposed extension of tax exemptions until 2041 represents another step in India’s efforts to position itself as a global electronics manufacturing powerhouse. By providing long-term certainty for foreign companies that supply machinery and components to contract manufacturers, the government aims to encourage sustained investment from companies such as Apple while strengthening the country’s role in global technology supply chains.
Looking ahead, if Parliament approves the amendments, the changes could further accelerate Apple’s manufacturing expansion in India and benefit a broader range of global electronics companies. Combined with other tax incentives for data centres and export-oriented industries, the proposal reinforces India’s ambition to become a preferred destination for high-value manufacturing and advanced technology investments.
Frequently Asked Questions
What tax relief is India proposing for contract manufacturers?
India has proposed extending a tax exemption for foreign companies supplying machinery to contract manufacturers from 2031 to March 31, 2041, under the draft Taxation and Other Laws (Amendment) Bill, 2026.
Why does this benefit Apple specifically?
The exemption prevents ownership of expensive manufacturing equipment supplied to Apple’s contract manufacturers in India from creating a taxable “business connection,” removing tax uncertainty and supporting Apple’s strategy to diversify production beyond China.
How important has India become to Apple’s manufacturing?
According to Counterpoint Research, India is expected to produce 26% of the world’s iPhones in 2026, up from just 6% four years earlier, making the country an increasingly central part of Apple’s global supply chain.
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