Apple’s iPhone production in India is getting more of a boost, as the government considers extending a tax exemption on manufacturing machinery and component imports until 2041.
India is a major location in Apple’s work to diversify its production outside of China. While it has already benefited from many incentives from the country, its supply chain stands to benefit even more.
A draft proposal seen by Reuters affects a tax exemption that India introduced in February. That incentive, applicable to foreign companies, was introduced after Apple lobbied against being taxed for iPhone machinery it owned in India but provided to contract manufacturers.
Under the original incentive, it was set to expire in 2031. Under the proposals, it would instead run until 2041.
At this time, the draft proposal still needs to pass through both houses of Parliament for approval, in a process that can take months, if not years.
Beyond machinery
The proposals don’t just extend the period of exemption on taxes for machinery. It also extends into the realm of component storage with regard to exports.
India will also exempt foreign companies from being taxed for storing and shipping parts used to manufacture components and products. However, only for hardware that is not intended for sale in India.
Instead, factories and warehouses would have to set up in customs-bonded areas. This refers to regions that are considered to be outside India’s customs border for taxation purposes.
Items imported and stored in these areas would not be subject to import taxes. That is, so long as the products and components made with them are then exported out of the country.
If those items are then sold within India, they would be subject to import taxes as normal.
For Apple, the change would be beneficial, since it wouldn’t pay import duties. The intention is to make India more attractive for producing iPhones intended for exports.
Apple already benefits from import duty cuts on July 9, affecting select components used to produce smartphones. The proposed change will bring those same taxes down to zero, for export-only production.
Data storage
While the bulk of the proposals surround manufacturing, there’s also some relating to another kind of storage. That of data.
In February, India introduced a tax exemption for foreign companies using data centers in the country, for providing services to users around the world. That tax exemption lasts until 2047.
However, the proposal extends the exemption to allow those data centers to be leased by Indian partners, rather than be owned outright. The change means it will lower the capital requirements for Indian partners, opening it up to smaller and mid-sized firms.
To Apple, it means a bit more flexibility if it wants to set up data centers in the country.
This story originally appeared on Appleinsider
