The move could spur faster electronics manufacturing investment as Apple and others fund costly equipment, easing burdens on contract manufacturers.
India has handed Apple a boost by allowing foreign companies to fund manufacturing equipment for contract partners without triggering tax liabilities, easing a long standing concern for the iPhone maker as it expands production in the country.
The decision, announced as part of Finance Minister Nirmala Sitharaman’s 2026-27 annual budget, allows foreign firms to provide machines to contract manufacturers in certain areas for five years without facing income tax risks. The move is aimed at promoting electronics manufacturing and is expected to encourage faster investment by global companies.
Apple has been growing rapidly in India as it diversifies its manufacturing base beyond China. According to Counterpoint Research, the iPhone’s share of the Indian smartphone market has doubled to 8% since 2022, while India’s share of global iPhone shipments has risen fourfold to 25% over the same period.
Previously, Apple had raised concerns that paying for high end machinery used by its Indian contract manufacturers could be treated as a business connection under Indian tax law, potentially exposing it to taxes on iPhone sales profits. This risk had forced partners such as Foxconn and Tata to invest billions of dollars themselves in equipment.
Under the revised rules, mere ownership of machinery by a foreign company will not attract taxes if the equipment is used by an Indian contract manufacturer. The exemption will apply until the 2030-31 tax year and only to factories located in customs bonded areas, which primarily cater to exports.
Revenue Secretary Arvind Shrivastava said the change would provide certainty to foreign investors. Tax experts said the move removes a major barrier to electronics manufacturing, enabling faster scale up and greater confidence for global players looking to produce in India.
