Tax relief for electronics contract manufacturing extended to 2041

The Indian government has proposed extending tax exemptions for foreign companies that supply machinery and components to contract manufacturers, pushing the deadline to 31 March 2041 under the Taxation and Other Laws (Amendment) Bill, 2026. The relief was introduced in February 2026 with a 2031 expiry, so this adds a further decade.

The exemption covers income from supplying machinery to contract manufacturers, and from storing and providing parts within customs bonded areas. It applies to mobile phones, laptops, tablets, servers and wearable devices.

The practical effect is to settle a question that has hung over the arrangement: whether a foreign brand owning machinery inside an Indian contract manufacturer’s plant creates a business connection, and therefore Indian tax exposure on its profits. Apple is the most cited beneficiary.

The limitation matters. Benefits apply only inside customs bonded areas, which sit outside normal customs jurisdiction, and domestic sales out of those facilities still attract import duties. The measure is aimed at export manufacturing rather than at supplying the Indian market.

For consumer brands the read is about time horizons. A fifteen year window is long enough to justify tooling and capacity decisions that a five year one cannot, which is usually what actually moves manufacturing.