Apple urges India to change tax law hindering iPhone production expansion

The U.S. tech giant is seeking relief from an Indian tax rule that could make its iPhone manufacturing profits taxable, as it looks to turn India into a key global production hub.

Apple is lobbying India’s government to amend a tax law that could subject it to levies on high-end manufacturing equipment it owns and provides to its iPhone assembly partners.

Under India’s 1961 Income Tax Act, foreign ownership of production machinery can be deemed a “business connection,” potentially making Apple’s profits taxable in India. This prevents the company from using the same model it applies in China, where it owns manufacturing equipment without facing tax liabilities.

Apple, which is rapidly expanding its production base in India with partners Foxconn and Tata, fears the current rule could slow its growth. Since 2022, iPhone’s market share in India has doubled to 8%, and the country’s share of global iPhone output has surged to 25%.

Indian officials are cautiously reviewing Apple’s request, noting that any change could affect the country’s right to tax foreign companies. Experts warn that without legal adjustments, Apple could face billions of dollars in potential tax exposure.