Targeting Made in China! India Plans to Extend Tax Incentives to 2041 to Attract Apple, Google Production Expansion

The Indian government is considering expanding tax incentives for foreign companies, particularly those supplying equipment to local electronics manufacturers. This move is expected to encourage technology giants such as Apple (AAPL-US) and Google (GOOGL-US) to expand their production capacity in the country.

According to sources cited by Bloomberg, Prime Minister Narendra Modi's administration plans to introduce an amendment to the Income Tax Act this week. The proposed amendment would extend the existing tax exemption period for contract manufacturers from the current 2031 deadline to 2041—a ten-year extension. The policy covers various electronic products, including smartphones, laptops, tablets, and servers.

Once approved by Parliament, this measure would allow foreign firms like Apple and Google to use their own funds to purchase production or testing hardware for suppliers, thereby reducing manufacturing costs for devices such as iPhones and Pixel phones. Under the current framework, such equipment is typically acquired by contract manufacturers themselves and factored into overall production costs, leading to higher expenses.

This policy reaffirms the Modi government’s ambition to position India as a key alternative hub in the global supply chain, promoting diversification away from Chinese manufacturing.

Last month, the New Delhi government announced an additional investment of ₹1.9 trillion (approximately $19.7 billion) to further scale up domestic semiconductor and smartphone manufacturing. Over the past decade, India has rolled out more than $26 billion in industrial incentive programs, successfully attracting companies including Apple and Samsung Electronics. These efforts have significantly boosted exports of iPhones manufactured in India.

However, manufacturing remains a weak spot in India’s economy. Currently, the sector accounts for about 17% of gross domestic product (GDP), falling short of the government’s target to increase it to 25%.