India Proposes Extending Critical Supply Chain Tax Breaks to 2041
A draft amendment would shield foreign equipment owners from income tax for another decade, supporting Apple's shift away from China.
The Indian government has proposed a draft amendment to extend tax exemptions for foreign companies that supply machinery and equipment to domestic contract manufacturers. The move provides a decade of additional tax certainty for global tech giants, most notably Apple, as they scale production within the region.
Under the proposal, the expiration date for these tax breaks would move from 2031 to March 31, 2041. The exemption is designed to prevent foreign suppliers from becoming liable for Indian income tax solely because they own the equipment used by local contract manufacturers. This regulatory shield is paired with other recent incentives; in July 2026, India removed import duties of 5% and 7.5% on various components used to manufacture smartphones and other electronic devices.
The Shift to 'Make in India'
This policy shift comes as Apple aggressively diversifies its supply chain to reduce its historical reliance on Chinese manufacturing. Driven by geopolitical tensions and rising labor costs, the company has leveraged India's 'Make in India' initiative to establish a massive production hub. The scale of this transition is evident in the data: India is projected to produce 26% of the world's iPhones in 2026, a sharp increase from just 6% four years prior, according to Counterpoint Research.
Strategic Implications
For Apple, the extension offers long-term financial predictability and mitigates the tax risks associated with its heavy infrastructure investments. By securing these exemptions through 2041, the company can more confidently transfer critical equipment to its partners and optimize its global export strategy. Riaz Thingna, a partner at Grant Thornton Bharat, noted that these changes enable foreign companies to store and transfer critical components in India, which helps mitigate supply chain disruptions caused by trade uncertainties.
Future Outlook
While the draft amendment signals a strong commitment from New Delhi to attract high-tech manufacturing, the final implementation remains subject to official approval. Industry observers will be watching to see if other global electronics firms follow Apple's lead in utilizing these exemptions to shift production. The primary focus remains on whether this tax certainty will accelerate the timeline for moving more complex component manufacturing—beyond final assembly—into the Indian market.