Apple gets regulatory relief in India, major manufacturing hurdles removed
Apple has won a major regulatory relief in India that removes tax uncertainty around financing iPhone manufacturing equipment, paving the way for rapid production expansion.
Apple has received a timely boost from the Indian government as it looks to deepen its manufacturing presence in the country. A quiet change in income tax rules has removed a major concern looming over the company’s iPhone production plans in India, making it easier for Apple to invest directly in the machines used to manufacture its devices.
At the heart of the issue was a technical but costly problem. Apple relies on contract manufacturers like Foxconn and Tata to assemble iPhones in India. However, Indian tax rules created uncertainty over what would happen if Apple itself paid for the high-end machinery used on the factory floor. There were fears that such funding could be viewed as a “business connection” in India, potentially allowing Apple to tax its local profits even if it does not run factories itself.
This risk did not exist in China and it put India at a disadvantage. To avoid the hassle, Apple’s manufacturing partners were forced to spend billions of dollars out of their own pockets to purchase equipment, slowing how fast production could ramp up.
That obstacle has now been removed. According to a Reuters report, the Indian government has approved amendments to its income tax rules that allow foreign companies to provide manufacturing equipment to local contract manufacturers without triggering additional tax liability. Under the updated framework, companies can finance machinery in certain export-focused sectors for up to five years without being exposed to additional tax risk.
Apple has been pushing for this clarity for some time. As Reuters reported, the company was concerned that paying for iPhone-making machines in India could lead to taxes on its sales profits, which it has not faced in other manufacturing centers. The concerns were so serious that Apple felt it best to scramble while its partners bore the financial burden.
The government has now put those concerns to rest. Revenue Secretary Arvind Srivastava confirmed the change, saying, “If you bring your machine, and that machine is used by a local manufacturer to produce something, we will give you exemption for 5 years.” This statement removes the gray area that Apple was wary of and gives the company a clear window to plan the investment without second-guessing the tax consequences.
For Apple, timing matters. The company is continuously increasing iPhone assembly in India as it wants to reduce its dependence on China. India has already started assembling new iPhone models, and production volumes are increasing year on year. Being able to directly finance advanced machinery lowers costs, speeds up expansion, and gives Apple more control over how fast capacity can increase.
There has also been relief for the company amid a mixed regulatory environment. While Apple has expanded its retail presence and manufacturing footprint in India, it also faces scrutiny on other fronts, including an antitrust probe and government proposals that could impact user data and privacy. Against that backdrop, the tax rule change stands out as a clearly positive development.
For India, this decision helps make large-scale electronics manufacturing more practical. The production of high-end smartphones relies heavily on expensive, specialized machines, and reducing concerns about who will pay for them removes a major friction point.
In simple terms, Apple can now write checks for factory equipment without worrying about tax surprises later. That one change could help iPhone production in India ramp up quickly and grow massively in the coming years.
