Apple is lobbying India’s authorities to amend earnings tax legal guidelines in order that Apple will not be taxed on possession of high-end iPhone machines it provides to contract producers, a problem seen as an obstacle to the corporate’s future enlargement, the folks mentioned.
The transfer coincides with Apple growing its presence in India because it diversifies past China. In response to Counterpoint Analysis, iPhone’s share within the Indian market has doubled to eight% from 2022 onwards. And whereas China nonetheless accounts for 75% of worldwide iPhone shipments, India’s share will quadruple to 25% from 2022 onwards.
India is the world’s second largest cell market. Apple’s contract producers Foxconn and Tata are spending billions of {dollars} to open 5 factories, however tens of millions of these {dollars} are going towards shopping for costly equipment to assemble iPhones.
Consultants say Apple may face billions of {dollars} in extra taxes if it adjustments its enterprise practices with out convincing New Delhi to amend a 1961 legislation masking international possession of gadgets utilized in India.
In China, Apple procures the equipment used to make iPhones and palms it over to contract producers, and though it owns it, it’s not taxed.
Nevertheless, this isn’t attainable in India. That is as a result of earnings tax legal guidelines would contemplate such possession by Apple to be so-called “business-related,” that means the U.S. firm’s iPhone income could be liable to pay Indian taxes, the federal government official and two different business sources mentioned.
Apple executives have been in talks with Indian authorities in current months to reform the legislation, involved that the present legislation may hinder the corporate’s future progress, folks conversant in the matter mentioned.
“Contract producers can’t make investments greater than a sure sum of money,” mentioned the primary business supply. “Adjustments to legacy legal guidelines would make it simpler for Apple to develop…India may turn into extra aggressive globally.”
Reuters first reported Apple’s issues and lobbying efforts towards the legislation.
Apple didn’t reply to Reuters’ questions, nor did India’s IT and Finance ministries, that are concerned within the discussions.
Smartphone manufacturing is excessive on Prime Minister Narendra Modi’s agenda, and India’s deputy IT minister privately mentioned final yr that China and Vietnam may compete as main export hubs for smartphones due to decrease tariffs on telephone elements.
A senior Indian official mentioned “discussions are underway on tax guidelines affecting Apple,” however New Delhi is cautious as a result of any adjustments to the legislation may undermine India’s sovereignty to tax international firms.
“It is a troublesome determination,” the individual mentioned, emphasizing that increasing Apple’s funding is equally essential.
“India wants funding. We now have to seek out options.”
Apple has opened a small variety of immediately operated retail shops in India since 2023, but in addition sells merchandise by on-line and offline distributors. Through the years, Foxconn and Tata have invested greater than $5 billion to arrange Apple Manufacturing.
One of many precedents in Indian legislation that’s usually cited by tax specialists issues UK-based F1. India’s Supreme Courtroom dominated in 2017 that though F1 doesn’t personal the circuit close to New Delhi, it should pay tax on income made on days it exercised full management in the course of the Grand Prix India.
Consultants say that if Apple owns equipment at its iPhone manufacturing unit in India, it must handle it beneath present legislation.
“If Apple’s actions represent a enterprise nexus, world earnings could possibly be used as the premise for calculating earnings attributable to India, probably resulting in billions of {dollars} in tax legal responsibility,” mentioned Riaz Shinna, companion at Grant Thornton Bharat.
Taiwan’s Foxconn is Apple’s largest contract producer in India, transport merchandise price $7.5 billion in all of 2024 and $7.4 billion by August this yr, based on industrial customs knowledge.
However Apple’s South Korean rival Samsung makes practically all its telephones in its personal factories in India, so earnings tax legal guidelines do not trouble it.
In a confidential assertion to the federal government, the Indian Mobile Electronics Affiliation (ICEA), which backs Apple, referred to as for adjustments to the legislation, saying tax certainty is “of paramount significance to firms seeking to develop and scale up.”
“Typical CMs (contract producers) are unable or unwilling to put money into such giant portions of specialised tools…Tools prices can rise into the billions of {dollars},” ICEA mentioned, with out naming the businesses.
“In some instances, it could even be offered free of charge.”
issued – October 15, 2025 2:59 PM IST
