Apple is pressing India to revise a 1961 income tax law that could make the company liable for billions in taxes linked to iPhone manufacturing equipment it owns but leases to contractors, sources told Reuters. The issue poses a potential barrier to Apple’s long-term expansion in one of its fastest-growing markets.
In China, Apple provides similar machines to partners like Foxconn without being taxed. But in India, such ownership would qualify as a “business connection” under current law, making Apple’s global iPhone profits partially taxable in India. Executives have reportedly held several meetings with government officials to seek a legislative fix.
Apple’s growing role in India comes as it diversifies beyond China, now accounting for 25% of global iPhone production, up from just 6% in 2022. Contract manufacturers Foxconn and Tata have invested more than $5 billion in local facilities, but industry groups warn that tax uncertainty could limit future investment.
The India Cellular & Electronics Association, which supports Apple’s stance, told the government that “typical contract manufacturers are unable or unwilling to invest in such large quantities of specialized equipment,” calling tax clarity “paramount” for expansion.
While officials confirm discussions are underway, they remain cautious about changing rules that could weaken India’s right to tax foreign companies. Apple’s case echoes a 2017 ruling involving Formula One, where the court held that exerting control over operations in India triggered tax obligations.
