India Extends Tax Breaks for Contract Manufacturers to 2041

India's central government has proposed extending tax exemptions until 2041 for foreign companies that provide machinery to their contract manufacturers in the country. This move is expected to provide significant relief to major foreign electronics manufacturers.

The proposed amendments, part of the Taxation And Other Laws (Amendment) Bill, 2026, would apply to manufacturers of mobile phones, laptops, personal computers, tablets, servers, and wearable devices. The changes also aim to exempt income for foreign entities derived from storing and providing necessary components to contract manufacturers.

These tax incentives are specifically designated for factories and warehouses located within "customs-bonded areas" (CBAs). Goods in CBAs can be stored and processed without immediate payment of customs duties, making these zones attractive primarily for export. Devices sold domestically from such facilities would still incur import duties.

The proposal builds on tax exemptions first introduced in February of this year, which were initially set to expire in 2031. Apple had reportedly lobbied the government to relax income tax laws, seeking to avoid being taxed on the ownership of high-end machinery supplied to its vendors in India.