India has proposed extending tax exemptions for foreign companies supplying machinery to local contract manufacturers all the way out to March 2041, a decade-long extension of a break first introduced in February that had been due to expire in 2031. NEWSCENTRAL‘s analysis points to Apple as the clear intended beneficiary, given that the company lobbied hard for exactly this kind of certainty as it races to make India central to its iPhone supply chain.
India is on track to produce 26% of the world’s iPhones in 2026, up from just 6% four years ago, and Apple’s concern had been that Indian tax law, unlike China’s, could treat its ownership of the high-end machinery it supplies to contract manufacturers as a taxable “business connection,” exposing its iPhone profits to Indian tax. The extended exemption removes that risk for machinery used to make phones, tablets, laptops and wearable electronics.
Freddy Miller, Senior Analyst at NEWSCENTRAL, notes that the scale of the concession signals how aggressively India is now competing for manufacturing capacity that used to be uncontested Chinese territory. “A tax certainty horizon stretching to 2041 is not a routine policy tweak, it’s India telling every electronics manufacturer weighing where to build next that it is willing to remove tax risk as a variable entirely,” Miller notes.
The government has also extended tax-free treatment to foreign companies that store and supply components to contract manufacturers through 2041, provided the factories and warehouses sit in customs-bonded zones that count as being outside India’s formal customs border, a structure that only makes commercial sense for manufacturers focused on exports rather than domestic sales, since goods sold within India from those facilities still attract import duties.
A separate, earlier exemption already covers foreign companies using Indian data centers to serve global clients through 2047, and the new proposal would let Indian partners lease rather than own the underlying data center infrastructure, lowering the capital commitment required to enter the market.
Nathan Clark, Enterprise IT and Systems Architecture Analyst, emphasizes that the leasing provision is the more consequential change for the technology sector specifically. “Removing the requirement to own the physical data center infrastructure outright opens the market to smaller cloud and hosting providers who previously couldn’t justify the capital outlay, and that could meaningfully deepen India’s data center ecosystem over the next decade,” Clark emphasizes.
We at NEWSCENTRAL consider the sequencing of these measures, manufacturing first, then data infrastructure, then a fifteen-year exemption proposed separately for foreign diamond miners and traders operating through designated trading zones, as evidence of a coordinated strategy to make India the default alternative location for supply chains that no longer want to depend entirely on China.
India is already the world’s largest diamond-cutting and polishing hub, and layering a long-dated tax exemption onto that existing advantage suggests policymakers are applying the same playbook, use tax certainty to convert an existing structural advantage into a durable competitive moat, across multiple industries simultaneously rather than treating electronics manufacturing as a one-off priority.
Apple’s win here is significant in its own right, but the more durable story is a government using the tax code as an industrial policy tool with a multi-decade time horizon – an approach NEWS CENTRAL expects other emerging manufacturing hubs to study closely as they compete for the same relocating supply chains.