Overview
- The government published a draft amendment reported on Monday that would extend tax exemptions for foreign firms supplying machinery to contract manufacturers until March 31, 2041.
- The move responds to lobbying by Apple and other electronics firms after a February exemption set to expire in 2031 raised fears that ownership of high-end equipment could create a taxable business connection in India.
- The proposed relief covers makers of mobile phones, tablets, laptops, hearing devices and wearables and exempts income from storing and supplying parts in customs-bonded areas intended for export.
- The draft also relaxes rules for foreign companies using Indian data centers by allowing those facilities to be leased rather than owned by local partners, lowering capital barriers for providers.
- The bill must pass both houses of Parliament before becoming law and could reinforce recent July customs duty waivers while its real impact will depend on how firms invest, local supplier development, and port-level customs implementation.