India allows foreign firms to fund equipment without tax risk

India's government on Sunday handed a major win to Apple by allowing foreign companies to provide machines to their contract manufacturers in certain areas for five years without any tax risk.

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Apple has been growing in India in recent years as it diversifies beyond China. Counterpoint Research says iPhone's share of the Indian market has doubled to 8% since 2022. And while China still accounts for 75% of global iPhone shipments, India's share has quadrupled to 25% since 2022.

Apple had been lobbying India's government to modify its income tax laws to ensure the company is not taxed for ownership of the high-end iPhone machinery it provides to its contract manufacturers.

In India, unlike China, Apple was concerned that if it paid for machines for its contract manufacturers, Indian law could consider that a so-called “business connection” and impose taxes on its iPhone sales profits. That had forced its contract manufacturers Foxconn and Tata to themselves spend billions of dollars on machines.