Daijiworld Media Network - New Delhi

New Delhi, Oct 15: Global tech giant Apple has urged the Indian government to relax taxation rules related to the ownership of high-end iPhone manufacturing machinery supplied to its contract manufacturers, Reuters reported.

Apple contends that provisions under the Income Tax Act of 1961 create a “business connection” between the company and India, making its iPhone profits liable for Indian taxes—even though the machinery is used by independent manufacturers.

In contrast, Apple faces no such taxation issues in China, where similar machinery is provided to its production partners. The company views this taxation hurdle as a major barrier to expanding its manufacturing base in India, which forms a key part of its strategy to diversify beyond China.

India, now the world’s second-largest smartphone market, has seen Apple’s market share double to 8% since 2022, while China still accounts for nearly 75% of global iPhone shipments.

Sources told Reuters that Apple executives have been holding discussions with top Indian government officials in recent months to seek revisions in the tax law. “If the legacy law is changed, it will become easy for Apple to expand … India can become more competitive globally,” a source was quoted as saying.

However, government officials remain cautious, acknowledging that while Apple’s investments are crucial, any relaxation could impact India’s ability to tax foreign firms and weaken its fiscal sovereignty.

“The decision will be a tough call,” a senior government official told Reuters, indicating that the Centre is likely to proceed carefully before taking a final stance.