Tech giant Apple (AAPL) is lobbying India’s government to change a tax law that could force it to pay billions in extra taxes for owning the expensive iPhone-making machines used by its contract manufacturers, according to Reuters. In China, Apple provides similar equipment to manufacturers without being taxed. But under India’s 1961 Income Tax Act, Apple’s ownership of machines could be considered a “business connection,” thereby making its profits taxable in the country.
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Unsurprisingly, Apple is worried that this could slow down its expansion in India, where iPhone market share has already doubled to 8% since 2022 and its share of global shipments has climbed to 25%. It is also worth noting that India has become increasingly important to Apple’s supply chain as Foxconn and Tata invest more than $5 billion in local factories. These plants rely heavily on specialized equipment, much of which Apple typically provides, exposing it to major tax bills.
Indian officials confirmed that talks with Apple are taking place, but they remain cautious. This is because changing the tax law could limit India’s right to tax foreign firms, even though it wants to attract more investment. At the same time, Apple’s expansion is part of Prime Minister Modi’s push to boost smartphone production. As a result, the India Cellular & Electronics Association, which supports Apple, has also lobbied for reforms by arguing that contract manufacturers can’t shoulder the cost of billions of dollars in specialized equipment.
Is Apple a Buy or Sell Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on AAPL stock based on 20 Buys, 13 Holds, and three Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average AAPL price target of $255.84 per share implies 2.4% upside potential.
