India's Budget 2026 has emerged as a strategic triumph for tech giants like Apple, deftly countering the trade barriers erected by US President Donald Trump's tariffs.

By introducing targeted tax exemptions and export incentives, Finance Minister Nirmala Sitharaman has fortified India's position in global manufacturing while shielding vulnerable domestic sectors from ongoing US protectionism.

A pivotal reform targets foreign electronics manufacturers operating through Indian contract partners. The Budget permits overseas firms to supply capital goods, equipment, and tooling to resident Indian companies in customs-bonded zones without incurring Indian income tax liability. This exemption holds until the 2030-31 tax year, explicitly aimed at fostering electronics production for export.

Previously, companies such as Apple faced a dilemma: retaining ownership of production machinery in India could trigger tax on local sales, prompting contract manufacturers like Foxconn and Tata to shoulder equipment costs instead. This policy shift eliminates that barrier, as noted by Shankey Agrawal of BMR Legal, who described it as removing a "key deal-breaking risk" for scaling up operations.

The provision is confined to customs-bonded areas, which fall outside standard Indian customs jurisdiction. Domestic sales from these zones will still face import duties, preserving the export-oriented thrust of the initiative.

Apple's expanding presence in India underscores the timing's relevance. According to Counterpoint Research, the iPhone's market share has doubled to 8 per cent since 2022, while India's contribution to global iPhone production has surged fourfold to 25 per cent.

Parallel to this, the Budget cushions labour-intensive exporters battered by Trump's tariffs, which persist at up to 50 per cent on select categories. Seafood processors, in particular, gain from an expanded duty-free import cap for specified inputs, rising from 1 per cent to 3 per cent of the prior year's Free on Board (FOB) export turnover.

FOB value represents the goods' worth at the departure port, excluding shipping and insurance costs. Sitharaman highlighted this as a direct measure to bolster seafood exports amid trade headwinds.

Footwear and leather sectors receive analogous relief. Duty-free imports of specified inputs, hitherto limited to finished leather or synthetic footwear exports, now extend to shoe uppers. Compliance eases further with the export validity period for garments and leather goods stretched from six months to one year.

India's textiles industry, accounting for 12 per cent of national exports and sustaining millions of jobs, benefits from the Textile Expansion and Employment Scheme. This provides capital aid for machinery upgrades, testing, and certification enhancements.

Complementing this is the National Fibre Scheme, designed to curb reliance on imported natural and synthetic fibres including silk, wool, jute, and man-made variants.

Special Economic Zones (SEZs), critical for export-driven units, avert further distress through a one-time concession. Eligible manufacturing entities can now sell limited volumes to the Domestic Tariff Area (DTA) at reduced duty rates. Between FY21 and FY25, 466 SEZ units closed across seven zones, underscoring the urgency.

Broader input cost reductions span high-priority domains. Customs duty exemptions persist for capital goods in lithium-ion battery cell production, battery energy storage systems, solar glass manufacturing, and critical mineral processing equipment.

Defence aviation sees tailored support: basic customs duty waivers apply to raw materials imported for aircraft parts used in maintenance, repair, or overhaul by defence units.

Nuclear power projects secure duty exemptions on imports through 2035, now encompassing all plant capacities.

Addressing chronic logistics vulnerabilities, the Budget commits ₹10,000 crore to domestic container manufacturing. This initiative seeks to diminish dependence on Chinese suppliers and shield exporters from international shipping volatility.

These measures weave a dual strategy: accelerating high-tech inflows while fortifying traditional export bastions against geopolitical trade frictions.

Based On NDTV Report