India is considering extending tax exemptions for foreign electronics companies until March 31, 2041, a move that could significantly benefit Apple as it expands iPhone manufacturing in the country. The proposal, included in a draft amendment to tax laws, would extend incentives that were previously set to expire in 2031.
If approved by both Houses of Parliament, the measure would provide long-term tax certainty for foreign companies supplying machinery and components to contract manufacturers, reinforcing India's position as a global electronics manufacturing hub.
According to reports, Apple is likely to benefit the most from the proposal. The firm had been looking to gain a clarification on India's tax regime regarding the supply of costly equipment to its contractors, since this left it open to higher tax risks. Under the proposed policy reforms, foreign firms supplying equipment used in making phones, tablets, laptops, wearable technology, and hearing aids will continue to get tax exemptions until 2041.
The draft also extends tax relief on income earned from storing and supplying electronic components through customs-bonded facilities, encouraging export-oriented manufacturing.
The proposed tax extension aligns with the government's broader efforts to attract global manufacturers under its "Make in India" initiative. Apple's manufacturing footprint in India has grown rapidly as it diversifies production beyond China. According to Counterpoint Research, India is expected to manufacture 26% of the world's iPhones in 2026, compared with just 6% four years ago, highlighting the country's increasing importance in Apple's global supply chain. Industry experts say the extended incentives could encourage more multinational electronics companies to invest in production facilities and strengthen local supplier networks.
"The proposed tax changes will enable foreign companies to store and transfer critical equipment and components in India for their contract manufacturers, helping mitigate supply chain disruptions arising from trade uncertainties while providing greater tax certainty," said Riaz Thingna, a partner at Grant Thornton Bharat.
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Apart from the electronic manufacturing sector, the proposed bills are aimed at improving the investment environment of India by putting other measures into place. For example, foreign companies that use data centers in India to serve their clients around the world will not be required to own those data centers but rather lease them.
The bills also recommend a 15-year tax exemption on foreign diamond miners and dealers that trade through designated trading zones. The analysts said that this is meant to improve the ease of doing business, together with ensuring policy certainty in the long term for the international investors. The above measures will be effected only after parliamentary approval.