India’s government on Sunday delivered a significant victory for Apple by allowing foreign companies to supply machinery to their contract manufacturers in designated areas for five years without incurring any tax liabilities or risks.
Apple has expanded rapidly in India as part of its strategy to reduce reliance on China. According to Counterpoint Research, the iPhone’s share of the Indian smartphone market has more than doubled since 2022. Meanwhile, although China still represents about 75% of global iPhone shipments, India’s portion has surged fourfold to around 25% over the same period.
Reuters:
Apple had been lobbying India’s government to modify its income tax laws to ensure the company is not taxed for ownership of the high-end iPhone machinery it provides to its contract manufacturers.
In India, unlike China, Apple was concerned that if it paid for machines for its contract manufacturers, Indian law could consider that a so-called “business connection” and impose taxes on its iPhone sales profits. That had forced its contract manufacturers Foxconn and Tata to themselves spend billions of dollars on machines.
India on Sunday said that “to promote manufacturing of electronic goods for a contract manufacturer”, it is making certain law changes to ensure that mere ownership of machines by a foreign company does not lead to taxes on it…
The move could prompt Apple and other companies to invest rapidly in the electronics manufacturing space by taking over initial expenses for pricey machines, reducing the initial cost burden on contract manufacturers they partner with.
“We are saying that if you bring your machine, and that machine is used by a local manufacturer to produce something, we will … exempt you for 5 years. We are giving them certainty,” Revenue Secretary Arvind Shrivastava said at a post-budget press conference.
MacDailyNews Take: The ability for firms like Apple to move faster coupled with certainty is a Good Thing™ for both Apple and India.
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