India Grants Tax Relief to Boost Apple Manufacturing Expansion
India’s latest tax policy change could supercharge Apple’s supply chain investments in the region. The Indian government has introduced a significant tax break permitting international companies, such as Apple, to supply machinery to their contract manufacturing partners without triggering tax liabilities at select sites for up to five years, according to a report by Reuters.
Prior to the change, companies supplying contract manufacturers risked taxation on profits if the equipment was deemed to establish a “business connection.” This pushed factory partners like Foxconn and Tata Group to shoulder multimillion-dollar equipment costs, presenting a barrier to Apple’s manufacturing growth in India.
India Emerges as a Key Player in Apple’s Global Supply Chain
The move comes as Apple accelerates its manufacturing diversification strategy to reduce dependence on China amid geopolitical tensions. Analyst firm Counterpoint Research estimates that roughly 25% of iPhones are now assembled in India—a dramatic increase from just 6% in 2022. However, China continues to dominate iPhone production with around 75% of shipments originating there.
India’s domestic market for Apple is also showing signs of growth, with approximately 8% of Indian consumers purchasing iPhones since 2022. The government’s latest tax exemption is likely a direct result of lobbying efforts by Apple, which has advocated for policy changes to ease cost barriers in scaling its manufacturing footprint.
What This Means for India and Global Supply Chains
Industry analysts interpret the tax relief as a crucial step in making India more competitive against established manufacturing hubs like China and Vietnam. By enabling Apple and other multinational companies to supply costly high-end machinery without tax penalties, the policy could encourage substantial infrastructure investments and job creation in India over the medium term.
Furthermore, it aligns with India’s broader ambition of becoming a global manufacturing leader in high-value goods, a strategic pivot that mirrors its ongoing push in electronics manufacturing under programs like “Make in India.” As competitors race to capture a piece of Apple’s multi-billion-dollar supply chain, tax policy flexibility may give India a critical edge in attracting long-term investments.
The Road Ahead for Apple and Indian Manufacturing
The new tax exemption is expected to accelerate Apple’s capacity expansion through its manufacturing partners Foxconn, Pegatron, Wistron, and Tata. Increased production volume could also lead to further localization of the iPhone supply chain in India, potentially expanding to component-level manufacturing in the future.
However, challenges remain. India’s manufacturing ecosystem will need sustained development in infrastructure, logistics, and skilled labor to fully capitalize on this policy shift. Additionally, Apple’s balancing act between Indian expansion and its existing reliance on Chinese factories will remain a closely watched strategy in the months and years ahead.
Will India’s policy gamble pay off, reshaping the global electronics manufacturing map? All eyes are on Apple’s next moves as competition in the global supply chain intensifies.
