New Delhi, October 15, 2025 — Global tech giant Apple Inc. (AAPL.O) is lobbying the Indian government to amend its income tax laws, arguing that outdated rules could impede the company’s ambitious manufacturing and retail expansion in the world’s second-largest smartphone market, according to multiple sources familiar with the matter.
The proposed changes relate to Apple’s ownership of high-value manufacturing equipment used by its contract partners such as Foxconn and Tata Electronics in India. Currently, India’s Income Tax Act of 1961 treats such ownership as a potential “business connection”, which could subject Apple’s profits to domestic taxation — a move the company wants to avoid.
Apple’s Expansion Strategy in India
Apple has been steadily strengthening its foothold in India as part of a broader plan to diversify its manufacturing base beyond China. According to Counterpoint Research, Apple’s market share in India has doubled to 8% since 2022, while the country’s contribution to global iPhone shipments has quadrupled to 25% in the same period.
India has emerged as a critical manufacturing hub for the Cupertino-based company, with Foxconn and Tata investing billions of dollars in new assembly plants across Tamil Nadu and Karnataka. These facilities are key to Apple’s Make in India initiative, enabling the company to produce newer models like the iPhone 17 Pro Max for domestic sales and exports.
The Tax Law at the Center of the Dispute
In China, Apple typically purchases and owns the highly specialized equipment required for iPhone assembly, which it then provides to its manufacturing partners. The company does not face tax liabilities there despite owning the machines.
However, Indian tax authorities interpret the same practice differently. Under Section 9 of the Income Tax Act (1961), Apple’s ownership of equipment installed in India could create a “permanent establishment” or “business connection,” potentially making a portion of its global income taxable in India.
“If Apple owns and controls production machinery on Indian soil, it could legally be viewed as conducting business operations within India,” explained a senior government official involved in the discussions. “That opens the door to significant tax exposure.”
Industry experts estimate that such a scenario could lead to billions of dollars in additional taxes for Apple, undermining its cost competitiveness and discouraging further investment.
Lobbying Efforts and Government Discussions
Sources reveal that Apple executives have held multiple rounds of talks with India’s Finance and IT ministries in recent months. The company, alongside the India Cellular & Electronics Association (ICEA) — an influential industry body that represents Apple and other major players — has submitted formal representations seeking clarity and amendments to the existing law.
“Contract manufacturers cannot invest indefinitely in expensive production lines,” said an industry insider. “If India modernizes the tax code, Apple can scale faster, and India could emerge as a global iPhone manufacturing powerhouse.”
Government officials confirmed that policy discussions are ongoing, though the issue remains delicate. “India needs investment and job creation, but we must protect our right to tax foreign entities fairly,” one senior official said. “It’s a tough balance.”
High Stakes: Billions in Specialized Equipment
Apple’s business model involves using high-precision robotics and proprietary assembly machinery, often worth billions of dollars per production line. These machines are central to the company’s quality control and design secrecy — factors that Apple prefers to manage directly rather than outsourcing entirely to manufacturers.
ICEA, in a confidential report to the government, argued that the cost of such equipment is prohibitively high for contract manufacturers to bear on their own. “Tax certainty is paramount for businesses seeking to expand and scale,” the group said, emphasizing that many companies, including Apple, supply specialized tools at no cost to manufacturing partners.
Comparisons and Legal Precedents
Legal experts have cited past Indian court rulings to highlight the complexity of Apple’s case. A notable precedent involves the Formula One (F1) Grand Prix case of 2017, in which the Supreme Court of India ruled that F1 had a taxable “business connection” in India because it exercised control over the racing circuit during its events, even without owning the venue.
“If Apple exerts control over its machines and operations inside Indian factories, the same logic could apply,” said Riaz Thingna, Partner at Grant Thornton Bharat LLP. “That would expose the company to taxation based on global income linked to Indian activity.”
India’s Growing Role in Apple’s Global Supply Chain
Despite regulatory challenges, Apple has been aggressively expanding its presence in India. Since 2023, it has opened several flagship Apple Stores in cities like Mumbai and Delhi while simultaneously boosting exports of “Made in India” iPhones.
Taiwan’s Foxconn, Apple’s largest supplier, shipped $7.4 billion worth of products from India by August 2025 — almost matching its total shipments for the entire previous year. India is fast becoming Apple’s key export base, competing with Vietnam and China.
Unlike Apple, Samsung Electronics (005930.KS) is largely unaffected by the tax rule, as it manufactures nearly all its devices in wholly-owned Indian factories, a structure that simplifies compliance with local laws.
Balancing Tax Policy and Investment Goals
The Modi government faces a critical decision: whether to maintain existing tax structures or modify them to attract larger foreign investments. While the Make in India initiative aims to turn the country into a global electronics hub, policymakers remain wary of granting exemptions that might weaken India’s tax sovereignty.
“India must find a middle path,” noted an industry analyst. “If handled carefully, this could unlock more investment from Apple and send a strong signal to other global manufacturers.”
Conclusion
Apple’s push to reform India’s income tax laws represents more than just a corporate lobbying effort — it highlights the growing interdependence between India’s economic ambitions and global tech supply chains. As negotiations continue, the outcome could shape Apple’s long-term strategy in South Asia and redefine India’s position in the global smartphone manufacturing ecosystem.
Leave a Reply