India is taking bold steps to transform its manufacturing landscape and attract foreign investments. The government is considering a series of tax reforms that could significantly benefit multinational corporations, particularly in the tech sector. These measures are part of a broader strategy to position India as a leading global manufacturing hub.
The proposed tax incentives are designed to make India a more attractive destination for foreign companies looking to diversify their supply chains. With a focus on reducing import duties and providing tax exemptions, the government aims to create a favorable environment for high-tech manufacturing.
Extending Tax Exemptions for Machinery and Components
One of the key proposals involves extending a tax exemption on manufacturing machinery and component imports until 2041. This exemption, initially introduced in February 2026, was set to expire in 2031. The extension would apply to foreign companies, including Apple, which has been lobbying against being taxed for iPhone machinery owned in India but provided to contract manufacturers.
The draft proposal, seen by Reuters, also includes exemptions for storing and shipping parts used to manufacture components and products. However, this exemption would only apply to hardware not intended for sale within India. Factories and warehouses would need to be set up in customs-bonded areas, which are considered outside India’s customs border for taxation purposes.
Benefits for Apple and Other Tech Giants
For Apple, these changes would be highly beneficial. The company would not have to pay import duties, making India a more attractive location for producing iPhones intended for export. This aligns with Apple’s strategy to diversify its production outside of China. Additionally, the proposed changes would bring import taxes down to zero for export-only production, further incentivizing foreign investment.
Data Storage and Financial Market Reforms
The proposed tax reforms also extend to data storage and financial markets. In February 2026, India introduced a tax exemption for foreign companies using data centers in the country to provide services to users around the world. This exemption lasts until 2047. The new proposal extends this exemption to allow data centers to be leased by Indian partners rather than owned outright, lowering capital requirements for smaller and mid-sized firms.
In the financial sector, the government plans to formalize tax exemptions for overseas investors purchasing Indian government bonds. This move aims to make India’s financial markets more attractive to global capital. Additionally, lawmakers will consider protecting offshore investment funds from tax liabilities when their portfolios are managed by India-based fund managers.
Broader Implications for the Economy
The proposed reforms are part of Prime Minister Narendra Modi’s broader strategy to strengthen India’s economy and enhance its competitiveness. By attracting multinational manufacturers and expanding high-tech manufacturing, India aims to improve its economic resilience, especially in the face of recent geopolitical tensions.
finance Minister Nirmala Sitharaman is expected to introduce the legislation during the current parliamentary session. However, the timing of the bills could be affected by repeated disruptions due to protests by opposition lawmakers. If approved, the tax package would represent a significant step in India’s long-term strategy to boost foreign direct investment and expand its manufacturing capabilities.
