India's Electronics Manufacturing Drive
India Proposes Extended Tax Breaks Until 2041 to Lure Global Electronics Manufacturers
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Key Points
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The extension would take effect only after Parliament approves the amendment, meaning the measures are contingent on parliamentary action before they can be implemented.
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The draft legislation would include a 15-year tax exemption for foreign diamond miners and traders selling rough diamonds through designated zones, expanding exemptions beyond electronics.
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It would also allow foreign partners to lease data centers in India rather than owning them, lowering upfront investment and improving cost efficiency.
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Counterpoint Research projections cited in coverage note India could account for 26% of global iPhone production by 2026, up from about 6% in 2022, underscoring the rationale for the relief.
India has proposed extending a key tax break for foreign electronics companies until March 31, 2041 — a move widely seen as a direct boost to Apple's iPhone manufacturing push in the country, according to MacRumors and AppleInsider. The draft amendment would exempt foreign firms that supply machinery to contract manufacturers from paying taxes on that income for 15 more years.
The proposal still needs Parliament to approve it before it can take effect. But if passed, analysts say it could cement India's role as a major global electronics hub — and accelerate a production shift away from China that is already well underway.
Apple Is the Clear Winner of This Tax Deal
Apple lobbied heavily for these exemptions, according to MacRumors. The company relies on Indian contract manufacturers — including Foxconn and Tata — to assemble iPhones. Foreign firms that own the machinery used in that process would no longer face tax bills on income tied to those assets.
The numbers show how fast India's role is growing. Counterpoint Research projects India could account for 26% of global iPhone production by 2026, up from just 6% in 2022, as cited by iClarified. That rapid growth is exactly why Apple pushed for long-term tax certainty — not just a short-term fix.
New Rules Cut Costs for Foreign Partners Beyond Machinery
The draft legislation goes further than just machinery. It would also cover income earned from storing and supplying components in customs-bonded warehouses — tax-free storage zones that sit outside normal import rules, according to MacDailyNews. That change lowers costs at every step of the supply chain.
Foreign partners would also be allowed to lease data centers in India rather than buying them outright. That removes a major upfront cost barrier. Previously, ownership was required to qualify for certain tax benefits, which discouraged smaller or more cautious investors from committing to the country.
Diamond Sector Gets Its Own 15-Year Exemption
Electronics is not the only industry getting a boost. The draft bill also proposes a 15-year tax exemption for foreign diamond miners and traders who sell rough diamonds through India's designated special trade zones, according to iClarified. That signals India's broader push to grow exports across multiple sectors — not just tech.
The move reflects a wider government strategy: use targeted tax relief to pull high-value global trade through Indian soil. By housing diamond trading in designated zones, India aims to compete with established hubs like Dubai and Antwerp.
India's 2030 Electronics Ambitions Hinge on Policy Stability
India has set an ambitious goal: grow its electronics manufacturing sector to hundreds of billions of dollars in value by 2030. To get there, officials need multinationals to make decade-long bets on Indian factories. A tax break running to 2041 is designed to make those bets easier to justify, according to AppleInsider.
The government has paired this proposal with other moves, including cuts to import duties on key components. Together, these steps are meant to close the cost gap with China. Observers say the 2041 deadline — 15 full years away — is a deliberate signal that India's pro-manufacturing policy is here to stay, per MacDailyNews.
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