Policy Shift Powers iPhone Dreams: India Opens Doors to Foreign Equipment Funding

In a significant boost to India’s electronics manufacturing ambitions, the government has introduced a new rule allowing foreign firms to freely fund and supply equipment to contract manufacturers operating in designated customs-bonded areas. The announcement, made on February 1, 2026, during Union Budget discussions, is being hailed as a major win for Apple, which has been lobbying for such reforms to expand its iPhone production in India.

Key Highlights:

Tax relief for foreign firms: The new rule exempts foreign companies from tax liabilities on machinery provided to Indian contract manufacturers for a period of five years, effective until the 2030-31 tax year.

Customs-bonded zones: The policy applies specifically to factories located in customs-bonded areas, which are treated as outside India’s customs border for taxation purposes.

Apple’s lobbying success: Apple had long sought clarity on tax treatment of equipment ownership, fearing double taxation. The new rule addresses these concerns, enabling smoother expansion of its supply chain in India.

Boost to smartphone manufacturing: India has positioned smartphone production as a key pillar of Prime Minister Narendra Modi’s “Make in India” agenda, and this reform is expected to accelerate local assembly and exports.

Industry impact: Analysts believe the move will encourage other global tech giants to deepen their manufacturing footprint in India, reducing reliance on China and diversifying supply chains.

Economic outlook: By easing compliance and reducing tax risks, the government aims to attract billions in foreign investment, create jobs, and strengthen India’s position as a global electronics hub.

Broader Context:  
Apple has already scaled up production in India, with contract manufacturers like Foxconn, Pegatron, and Wistron assembling iPhones in Tamil Nadu and Karnataka. The new policy is expected to further incentivize these firms to import advanced machinery, thereby enhancing production efficiency and output.

Outlook:  
This reform signals India’s intent to balance foreign investment incentives with domestic manufacturing growth. For Apple, it represents a strategic victory that could make India one of its largest global production bases by the end of the decade. For India, it’s a step closer to becoming a world-class electronics manufacturing hub.

Sources: Reuters, Economic Times, Business Standard, Mint, India Today