Apple Inc. is intensifying efforts to persuade the Indian government to amend taxation laws that the company views as a barrier to its expansion in the world’s second-largest mobile market, according to a Reuters report. The tech giant is specifically targeting provisions in the Income Tax Act of 1961, which deem iPhone manufacturing machinery owned by Apple but used by its contract manufacturers as establishing a “business connection.” This subjects Apple’s profits to Indian taxes, unlike in China, where no such tax liability exists for similar arrangements. The push comes as Apple seeks to diversify its supply chain beyond China, with India emerging as a key manufacturing hub.

In recent months, Apple executives have engaged in high-level discussions with Indian officials to advocate for revisions to the tax law, arguing that the current framework hampers the company’s growth plans. Sources told Reuters that relaxing these rules would enable Apple to scale up operations, making India a more competitive player in global manufacturing. Apple’s market share in India has doubled to 8% since 2022, yet 75% of global iPhone shipments still originate from China, underscoring the strategic importance of expanding in India to reduce reliance on a single market.

The Indian government, however, is approaching the matter with caution, recognizing the delicate balance between attracting foreign investment and preserving its taxation authority. A government official described the decision as “a tough call,” noting that altering the law could weaken mechanisms for taxing foreign companies, potentially compromising India’s fiscal sovereignty. The stakes are high, as Apple’s investments are seen as vital for boosting India’s manufacturing sector and creating jobs, but any concessions must align with national interests.

Also Read: “Tim Cook to Retire Soon?” Ex-Apple CEO Drops Hint

Apple’s argument hinges on the limitations faced by its contract manufacturers, who can only invest so much without tax relief on machinery ownership. Sources emphasized that revising the legacy law could position India as a more attractive destination for global tech giants. As negotiations continue, the outcome will likely shape India’s role in the global supply chain and influence how foreign companies navigate the country’s regulatory landscape in pursuit of growth.

Also Read: EU Targets Big Tech Over Apps Hooking Kids: Apple, Google, and Social Media Giants Under Fire