India Tweaks Tax Rules, Clearing Way for Apple to Fund Manufacturing Equipment

India has delivered a significant policy win to Apple by amending its income tax rules to allow foreign companies to fund manufacturing equipment for local contract manufacturers without triggering tax liabilities. Announced as part of the Union Budget 2026–27, the change removes the risk that ownership of high-end machinery could be treated as a “business connection” and expose foreign firms to taxes on sales profits. The exemption will apply for five years and is aimed at encouraging electronics manufacturing in the country.

Apple, which has been steadily expanding its footprint in India as it diversifies production beyond China, had lobbied for the change over concerns that funding iPhone-making machines could attract taxes. Until now, that risk had forced its partners such as Foxconn and Tata to bear the heavy upfront cost of equipment themselves. With India’s share of global iPhone production rising sharply since 2022, the new rule is expected to accelerate Apple’s manufacturing scale-up in the country.

The exemption will apply until the 2030–31 tax year and is limited to factories located in customs-bonded areas, which primarily cater to exports. Indian officials said the move provides certainty to global manufacturers and lowers entry barriers for investment in electronics production. Tax experts believe the reform removes a key deterrent to foreign participation and could boost confidence among global firms looking to deepen their manufacturing presence in India.

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