India Grants Tax Relief to Boost Apple Manufacturing

• India has given a five-year tax break allowing companies like Apple to supply machinery to contract manufacturers without tax liability
• The change removes earlier tax risks that discouraged direct equipment supply and slowed expansion
• It supports Apple’s shift of iPhone manufacturing to India and encourages further investment

The Indian government has granted international companies, including Apple, a significant tax concession that enables their equipment shipments to contract manufacturing partners through special sites during a five-year tax-free period.

The government has designed this initiative to create simplified regulations which will promote foreign investment in advanced manufacturing operations throughout the nation.

According to report, companies operating in India earlier faced the risk of being taxed on profits if machinery supplied to contract manufacturers was classified as creating a business connection in India.

The tax law interpretation which Apple’s manufacturing partners used to avoid tax responsibilities forced Foxconn and Tata Group to spend billions on equipment. The new exemption removes this disincentive and offers greater clarity and predictability for global firms expanding their manufacturing footprint in India.

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India strengthens its manufacturing base for Apple which uses this policy change to improve its production capabilities. Counterpoint Research estimates that 25 percent of iPhones emerge from Indian factories which represent a fourfold growth since 2022.

China controls about 75 percent of worldwide iPhone deliveries despite experiencing quick expansion in its manufacturing sector. Apple has expanded its presence in India because 8 percent of Indian consumers bought an iPhone since 2022.

Apple has actively lobbied the Indian government to amend tax rules which control supply of high-end manufacturing equipment to its partners. The latest decision will help investment development while increasing manufacturing capacity and establishing Apple as a permanent Indian manufacturing presence.