Apple is lobbying the Indian government to amend income tax rules that could otherwise impose billions of dollars in taxes on its iPhone operations, sources familiar with the matter told Reuters. The issue centers on the machinery Apple provides to its contract manufacturers, including Foxconn and Tata, to assemble iPhones locally.
Under India's current tax code, the ownership of such equipment by a foreign company could create a so-called "business connection," making Apple's global iPhone profits potentially subject to Indian taxation. In contrast, Apple is not taxed for owning assembly machinery in China, where similar arrangements are standard practice.
Officials and industry sources said Apple executives have held talks with Indian authorities in recent months to revise the 1961 law governing foreign ownership of equipment. Without changes, experts warn that Apple could face significant tax liabilities if it continues providing machinery to its Indian plants, potentially constraining its expansion plans in the world's second-largest smartphone market.
Reuters, citing Riaz Thingna, a partner at Grant Thornton Bharat LLP, added that if Apple's activities constitute a business connection, global revenue could be used to calculate income attributable in India, leading to billions in tax exposure.
A history of lobbying efforts in India
Apple has actively sought legal exemptions and regulatory adjustments in India to facilitate its business growth.
In 2016, when India required foreign single-brand retailers to source at least 30% of products locally, Apple requested an exemption, arguing that its products represented "cutting-edge" technology not easily sourced domestically. Although initially denied, the finance ministry later relaxed the rule, granting a three-year exemption with a possible five-year extension for advanced technology providers. This adjustment enabled Apple to open its own retail stores in India.
In August 2019, India amended foreign direct investment (FDI) regulations to allow online stores before physical outlets, helping Apple launch its online store without immediate compliance with local sourcing mandates.
Apple continued lobbying in labor and regulatory areas. In March 2023, it and Foxconn persuaded Karnataka state to amend labor laws, allowing 12-hour shifts and easing night work restrictions for women, aligning local operations with practices in China. In December 2023, Apple sought exemptions from India's proposed universal USB-C regulation, warning that retrofitting existing iPhone models could disrupt production under the production-linked incentive (PLI) program.
In May 2024, Apple, along with other tech firms, opposed India's proposed Digital Competition Bill, citing potential increases in user costs and reduced investment incentives.
Article edited by Jack Wu
