Apple Tax Exemption: In Budget 2026, Finance Minister Nirmala Sitharaman has announced a major policy relief for global electronics companies, including Tim Cook-led Apple. The government will now allow foreign firms to supply machinery to their Indian contract manufacturers for up to five years without facing any tax liability. This move offers significant tax relief to overseas manufacturers and also introduces targeted support for Indian exporters affected by long-standing US tariffs imposed under President Donald Trump.
Adding further, the move clears the way for faster scaling of iPhone manufacturing in India, enabling Apple and its contract partners to expand production capacity, strengthen the local supply chain, and support the country’s growing role in global smartphone exports.
The government’s dual strategy aims to boost high-end electronics manufacturing while protecting labour-intensive sectors such as seafood, textiles, and leather from global trade uncertainty. Under the new rule, foreign companies can provide machinery to Indian contract manufacturers operating in bonded customs zones without triggering taxes in India.
Tax relief till FY2031
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This exemption will remain in place until the 2030–31 financial year. However, products sold within India from these facilities will still attract import duties, keeping the focus firmly on exports. Meanwhile, India’s role in Apple’s supply chain continues to grow. She also outlines the government’s economic priorities, reform agenda and fiscal roadmap amid a challenging global environment.
Why India handed Apple and global electronics firms heavy tax break?
According to market researchers quoted by Reuters, Finance Minister Nirmala Sitharaman’s move could encourage Apple and other global companies to speed up investments in electronics manufacturing in India. The change allows them to bear the cost of expensive machinery, reducing the financial burden on their contract manufacturing partners. (Also Read: Best budget camera smartphones under Rs 50,000 in India; Check display, camera, battery, processor and price)
According to Counterpoint Research, the iPhone’s share in the Indian smartphone market has doubled to 8% since 2022. At the same time, India’s share of global iPhone production has jumped fourfold to 25%, while China still accounts for the remaining 75%.
The Cupertino-based tech giant Apple had raised concerns that paying for machinery used by its contract manufacturers in India could be treated as a “business transaction” under Indian tax laws. This could have led to additional tax liability on profits from iPhone sales in the country. Due to this, Apple’s key manufacturing partners in India, Foxconn and Tata, had to invest billions of dollars to purchase production equipment for iPhone manufacturing.
Apple raises regulatory concerns, Samsung remains unaffected
According to a Reuters report, Apple held multiple discussions with Indian government officials in recent months to seek changes to the existing regulations. The company feared that the rules could impact its long-term growth and expansion of iPhone manufacturing in India. The earlier policy did not affect Samsung, Apple’s main rival, as the South Korean company manufactures most of its smartphones in its own factories in India rather than relying on contract manufacturers.
