Apple is lobbying the Indian Government to make changes to decades-old tax laws that could force the company to pay billions in taxes on the equipment it owns in Indian iPhone factories, according to a Reuters report.
The push coincides with Apple’s growing India presence as it diversifies beyond China. Counterpoint Research says iPhone’s share in the Indian market has doubled to 8% since 2022. And while China still accounts for 75% of global iPhone shipments, India’s share has quadrupled to 25% since 2022.
Apple is pushing the Indian government to make changes in the Income Tax Act of 1961 to ensure it is not taxed for the high-value manufacturing machinery it owns and has been supplied to its contract manufacturers, including Foxconn and Tata Electronics. The issue could prove to be an obstacle to Apple’s expansion in the country.
Current Indian law treats such ownership as creating a “business connection”, making the company’s global iPhone profits taxable in India. However, in China, Apple operates under a different model, where the company buys the specialized machinery required to assemble iPhones and provides it to its manufacturing partners without becoming liable for local corporate tax. Apple is seeking a similar allowance in India.
“Contract manufacturers cannot put up money beyond a point,” said the first industry source. “If the legacy law is changed, it will become easy for Apple to expand … India can become more competitive globally.”
A senior Indian official said “discussions on taxation rules impacting Apple are ongoing”, but New Delhi is cautious as any changes to the law could diminish its sovereign right to tax a foreign company.
“It’s a tough call,” said the official. “India needs investments. We have to find a solution.”
Reuters reports that discussions with the Indian government on taxation rules are ongoing.