India’s government has proposed widening tax exemptions for foreign investors such as Apple, part of efforts to strengthen the country’s tech supply chain.
The move would extend tax breaks by 10 years to 2041 for foreign companies that supply equipment to contract manufacturers including Taiwan’s Foxconn and domestic giant Tata Electronics, which assemble iPhones in India.
Finance minister Nirmala Sitharaman said the proposed tax amendments, which were submitted to parliament on Tuesday, were needed “on an urgent basis” to “provide ease of doing business and tax certainty”.
New Delhi earlier this year introduced the tax exemption, which is valid until 2031, as part of Prime Minister Narendra Modi’s “Make in India” drive to turn the country into a manufacturing powerhouse.
Smartphone makers had been asking the government to modify laws to ensure companies are not taxed for owning the machinery they provide to their manufacturers, according to senior industry executives.
“When a foreign company supplies machinery and tooling to an Indian factory that makes electronics on its behalf, its income from doing so was made tax-free,” a finance ministry document said. “Based on representations from stakeholders, it was felt that the [original] exemption window is too short to plan large, long-term investments.
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India’s government has proposed widening tax exemptions for foreign investors such as Apple, part of efforts to strengthen the country’s tech supply chain.
The move would extend tax breaks by 10 years to 2041 for foreign companies that supply equipment to contract manufacturers including Taiwan’s Foxconn and domestic giant Tata Electronics, which assemble iPhones in India.
Finance minister Nirmala Sitharaman said the proposed tax amendments, which were submitted to parliament on Tuesday, were needed “on an urgent basis” to “provide ease of doing business and tax certainty”.
New Delhi earlier this year introduced the tax exemption, which is valid until 2031, as part of Prime Minister Narendra Modi’s “Make in India” drive to turn the country into a manufacturing powerhouse.
Smartphone makers had been asking the government to modify laws to ensure companies are not taxed for owning the machinery they provide to their manufacturers, according to senior industry executives.
“When a foreign company supplies machinery and tooling to an Indian factory that makes electronics on its behalf, its income from doing so was made tax-free,” a finance ministry document said. “Based on representations from stakeholders, it was felt that the [original] exemption window is too short to plan large, long-term investments.