Win For Apple? Govt Moves To Extend Tax Sops For Contract Manufacturers Till 2041

In a major relief for iPhone maker Apple, the Centre has proposed extending tax exemptions till 2041 to ​foreign companies that provide machinery to their contract manufacturers in the country.

As per The Taxation And Other Laws (Amendment) Bill, 2026 accessed by Inc42, the tax exemptions will be applicable to the manufacturers of mobile phones, laptops, personal computers, tablets, servers, wearable devices, among others.

The amendments also propose tax exemptions to the foreign companies’ income, specifically arising from storing and providing parts (needed to manufacture electronics components) ⁠to contract manufacturers till 2041.

“Further, Sl. No. 13G provides for tax exemption on income accruing or arising on account of storage of components in a warehouse in a custom bonded area, in the hands of a foreign company which stores components in a warehouse in a custom bonded area for providing them to a contract manufacturer to be used for manufacturing of specified electronic goods, for a period of fifteen years up to tax year ending on 31st March, 2041,” read the draft rules.

However, the proposed tax reprieve will only apply to factories and warehouses set up in “customs-bonded areas” (CBAs), which are considered outside the ambit of customs authorities. For the uninitiated, CBAs are facilities where imported or export-bound goods are stored and processed without immediate payment of customs duties and taxes.

As a result, devices sold within India ‌from such factories will attract import taxes, making such facilities attractive only for exports.

This comes months after the Union government introduced the ⁠tax exemption in February this year. At the time, the tax reprieve was only valid till 2031. 

The move came after Apple lobbied the Centre to relax income tax laws to ensure the company is not taxed for the ownership of high-end machinery, which it provides ​to vendors. As per reports, Apple feared that local tax laws could treat ownership of the machinery as so-called “business connection”, exposing its iPhone profits to taxes.

This comes days after the iPhone maker reported a record June 2026 quarter with strong double-digit revenue growth and robust demand for its Mac lineup. During the company’s Q3 FY26 earnings call, outgoing CEO Tim Cook said the company achieved June quarter revenue records across every geographic segment, including India. 

This comes as Apple continues to deepen its presence in India. Besides a major revenue market, the country has also emerged as one of the company’s largest manufacturing bases outside China. iPhone exports from India crossed the ₹2 Lakh Cr mark in FY26.

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