The Indian government is looking to boost the electronics manufacturing ecosystem in the country and provide more tax certainty by extending the tax exemptions for foreign companies that sell machinery and equipment to contract manufacturers until March 31, 2041.
Companies around the world that provide contract manufacturers in India with expensive machinery stand to gain from the idea, which is a section of the Taxation and Other Laws Amendment Bill, 2026. As part of its strategy to diversify its production beyond China, Apple has been swiftly increasing its manufacturing presence in India, thus this move is especially important for the company.
Foreign companies that supply equipment to producers of mobile phones, laptops, tablets, wearables, and hearing devices would be eligible for a tax exemption under the proposed revisions.
Although the tax exemption was first announced in February, its first application was limited to the years 2019–2021. The goal of extending the deadline to 2041 is to give global corporations that invest in India’s manufacturing ecosystem more time to plan.
This change is an attempt to allay fears that a taxable business link may be formed in India as a result of foreign businesses’ ownership of machinery supplied to their contract manufacturers in India.
As it increases iPhone manufacturing in India, Apple is among the corporations requesting more information on the matter. In 2026, India would be responsible for 26% of the world’s iPhone production, up from 6% in 2022, according to Counterpoint Research.
Income earned by foreign corporations storing and providing components used by electronics contract makers would also be extended tax exemptions under the proposed modifications.
Industries and storage facilities situated in customs-bonded zones, which are, for specific reasons, considered to be outside of India’s customs border, would be subject to the provision. Products sold within the country would still be subject to import charges, thus these facilities are especially important for factories that focus on exports.
Image: Fortune Today
