Apple Urges India To Revise Tax Rules Threatening Expansion Of High-End iPhone Manufacturing: Report

Apple is reportedly lobbying the Indian government to revise income tax regulations that threaten to impose billions of dollar in additional taxes on high-end iPhone manufacturing equipment the company supplies to its contract manufacturers, news agency Reuters reported.

The tech giant fears the current Income Tax law could significantly hamper its future expansion in the world’s second-largest mobile market.

Under existing Indian law, foreign ownership of manufacturing equipment creates what authorities call a “business connection”, potentially making Apple’s global iPhone profits taxable in India.

This contrasts sharply with China, where Apple procures specialised machinery for its contract manufacturers without facing tax liability, despite retaining ownership.

Apple executives have held discussions with Indian officials in recent months to modify the legislation.

The timing is critical as Apple’s Indian operations have expanded dramatically.

India’s share of global iPhone shipments has quadrupled to 25 per cent since 2022, while the country’s domestic market share has doubled to 8 per cent during the same period.

Contract manufacturers Foxconn and Tata have invested billions of dollars to establish five manufacturing plants, with most of those expenses directed towards acquiring expensive assembly machinery.

A senior Indian official confirmed discussions on taxation rules affecting Apple are ongoing, though New Delhi remains cautious as any changes could diminish its sovereign right to tax foreign companies.

The official noted India needs investments and both parties must find a solution.

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