India Proposes 2041 Tax Break as Apple Pushes More of Its Supply Chain Beyond China

India has floated draft tax amendments that would extend key exemptions for foreign companies supplying machinery—and storing or providing parts—to Indian contract manufacturers through March 31, 2041. Reuters, which saw the draft, said the government’s own framing is “to provide (tax) certainty.” The bill still has to clear both houses of Parliament, so treat this as policy intent with a long calendar, not a finished statute.

The first version of the break arrived in February 2026 and ran only to 2031, after Apple lobbied New Delhi to rewrite income-tax rules around high-end iPhone tooling placed with local assemblers. The August draft stretches that horizon by about a decade and keeps the same industrial bet: make India safer for foreign-owned capital equipment sitting on someone else’s factory floor.

Think of it as a rules fix for export-oriented electronics plants—especially those inside customs-bonded areas—so global brands can deepen Indian capacity without waking up to an unexpected tax footprint, rather than a cut in the GST shoppers pay on a phone.

Contract manufacturing sounds simple until the machines enter the chat. Apple’s model often means the brand specifies—and sometimes owns—the specialized tooling that Foxconn, Tata Electronics, or another partner runs. In China, that arrangement has long been workable for tax purposes. In India, Apple worried that ownership of those machines could be read as a “business connection,” a legal hook that can pull foreign profits into the Indian tax net.

That fear had practical consequences. Reporting around the February change said Apple’s Indian contract manufacturers had been forced to buy billions of dollars of equipment themselves so the foreign brand would not look like it was operating a taxable presence through its tools. When the assembler must finance the CapEx, ramps slow, balance sheets tighten, and the brand’s ability to standardize lines across countries gets messier.

The exemption’s logic, in plain English: if a foreign company keeps title to the equipment, the Indian manufacturer keeps day-to-day control, and production is done for a fee inside the right bonded setup, mere ownership should not, by itself, invent a taxable business connection. Draft summaries also stress that the Indian partner directs the equipment and produces electronic goods for consideration—conditions that keep the story about contract manufacturing, not a stealth branch office.

For Apple, longer certainty means it can keep placing proprietary lines in India the way a global supply-chain planner wants to: own the critical machines, let local operators run them, and expand capacity without a 2031 cliff hanging over every CapEx memo. For Foxconn, Tata, and other partners, it reduces the pressure to warehouse Apple’s tooling risk on their own books just to keep production legal and efficient.

The draft also covers foreign companies’ income from storing and providing parts used to make those devices for contract manufacturers, again through 2041. That matters when trade shocks and logistics delays make on-the-ground component buffers more valuable than theoretical just-in-time purity. Grant Thornton Bharat partner Riaz Thingna told Reuters the changes would help firms store and transfer critical equipment and components in India while softening disruption risk from trade uncertainty.

One important fence: the rules are aimed at factories and warehouses in customs-bonded areas, treated as outside India’s domestic customs border for duty purposes. Sell those devices into the Indian market from such facilities and import taxes can apply, which is why the design favors export platforms. Apple still sells heavily into India through ordinary retail and distribution; this break is about how production for global shipment is organized, not a free pass on every domestic unit.

The tax story lands on top of a manufacturing story that is already moving. Counterpoint Research, cited by Reuters, expects India to make about 26 percent of the world’s iPhones in 2026, up from roughly 6 percent four years earlier. Other industry estimates float nearby figures in the mid-to-high twenties; use Counterpoint’s number as the Reuters peg and expect revisions as calendar-year shipments land.

That climb sits on partner CapEx and India’s production-linked incentive push for large electronics—Foxconn and Tata among the names repeatedly tied to new southern plants and higher export volumes. Earlier reporting also tracked Apple’s effort to shift more U.S.-bound iPhone supply toward India as tariff and geopolitical risk around China rose. Those sourcing goals can slip; the direction of travel is what the 2041 proposal is trying to underwrite.

Retail is the public face of the same bet. When Tim Cook opened Apple BKC in Mumbai, the company was signaling that India is a demand market as well as a factory map. The draft tax text is the quieter infrastructure that lets the factory map thicken.

The draft does not stop at smartphones. Reuters reported that the extended exemption would apply to manufacturers of mobile phones, tablets, laptops, and hearing and wearable electronic devices. That list is how you invite Mac, iPad, Watch, and AirPods-class supply chains—and competitors in the same form factors—into the same bonded-zone logic.

Apple is the loudest beneficiary because it lobbied early and already runs large Indian iPhone volumes. The legal design, on paper, is category-based rather than Apple-only. Any foreign company that meets the ownership, control, consideration, and bonded-area conditions for those product types can argue for the same certainty. Google and other electronics brands have been named in market coverage as parties watching the same industrial policy lane.

What stays outside the headline list stays outside the promise. Do not read this draft as a blanket holiday for every circuit board or appliance line in India. Watch the final bill text for how tightly “hearing and wearable” and computer categories are defined once Parliament marks it up.

China-plus-one only works when the “plus one” can absorb capital equipment, components, and quality systems without inventing a surprise tax or customs cliff. Extending India’s exemption to 2041 is an admission that five years of certainty was too short for multi-year tooling cycles, and that New Delhi wants foreign brands to treat Indian bonded capacity as durable infrastructure rather than a temporary hedge.

China does not disappear from the map. It remains deep in components, skills, and scale. The strategic shift is optionality: more finished devices—and gradually more parts staging—can sit in India when politics, tariffs, or logistics make a single-country concentration expensive. Air cargo, memory, and advanced packaging elsewhere in Asia still decide how fast that optionality becomes real; assembly tax certainty is one necessary layer, not the whole stack.

For transpacific business readers, the actionable watchlist is simple. Does Parliament pass the 2041 date intact? Do bonded-zone footprints and partner CapEx announcements accelerate after the vote? Do tablets, PCs, and wearables follow phones into Indian export volumes the way the product list invites? If those answers trend yes, India is building the regulatory spine of an electronics-export base—exactly the kind of boring, powerful policy that eventually shows up in shipping schedules and earnings calls.