In Budget 2026, the government has made such a tax change which can give a faster pace to iPhone manufacturing in India. Under the new rule, foreign companies will now be able to provide machines to their contract manufacturers without additional tax risk. This step is considered directly beneficial for Apple and its partners Foxconn and Tata. The aim of the government is to make India a big export hub of electronics manufacturing. In such a situation, the manufacturing cost of iPhone in India may reduce and its effect will be seen on its price also.
The government has clarified that if a foreign company provides machinery or equipment to its contract manufacturer in India, then it will not be taxed merely because of ownership rights. Earlier, Apple was afraid that its profits could be taxed by considering the ownership of the machines as a business connection. For this reason, till now partners like Foxconn and Tata had to invest heavily in the machines themselves. This obstacle has been removed by the new rule. This will make production setup easier and faster.
This tax exemption will be applicable only to those factories which are established in customs bonded areas. These areas are technically considered outside the customs limits of India. If the products made here are sold in India, there will be import tax on them. Therefore, this model is especially beneficial for export-oriented manufacturing. The focus of the government is clear to increase global supply from India. This will strengthen electronics exports.
Increasing smartphone and electronics manufacturing is part of the government's major industrial agenda. Apple had been demanding changes in the tax law for the last several months. The company feared that the current rules might affect future investments. This change announced in Budget 2026 will be applicable till the 2030-31 tax year. Tax experts believe that this will increase the confidence of global companies. India will become an attractive option for high-end manufacturing on a large scale.
Apple is working on expanding its supply chain outside China and India is playing an important role in this. According to research firm Counterpoint, the market share of iPhone in India has doubled to 8 percent after 2022. India's share in global iPhone shipments has also increased rapidly. Where earlier most of the production was in China, now India's contribution is continuously increasing. New tax rules can further strengthen this trend. With this, India's role will become bigger on the global iPhone manufacturing map.
