India extends tax breaks for contract manufacturing, boosting Apple

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India has proposed extending tax exemptions until 2041 for foreign companies that provide machinery to contract manufacturers, a major win for Apple which had lobbied for the change. The draft bill, seen by Reuters, extends a previous exemption that was valid only until 2031. Apple feared that Indian tax laws could treat machinery ownership as a 'business connection' and expose iPhone profits to tax. The exemption now also covers storage of components and applies to mobile phones, tablets, laptops, and wearables manufactured in customs-bonded areas, making such facilities attractive mainly for exports.

Separately, the bill makes it easier for foreign firms to use data centre services in India by allowing leasing instead of ownership, lowering capital requirements. It also proposes a 15-year tax exemption for foreign diamond miners and traders selling rough diamonds in designated zones. The changes aim to provide 'tax certainty' and mitigate supply chain disruptions, said Riaz Thingna of Grant Thornton Bharat.