India has made a bold move to attract global tech investment. On Sunday, the government announced a significant tax incentive for foreign companies. These firms will not face taxes for over 20 years if they use local data centres to serve global clients. This aims directly to ease concerns about future tax liabilities in the sector.
Many data centres have sprung up across India in recent years. Despite this growth, a cloud of uncertainty lingered. Lawyers reported that foreign companies were worried. They feared New Delhi might later impose taxes on their worldwide income simply for using an Indian data centre.
Finance Minister Nirmala Sitharaman addressed these fears head-on. In her budget speech for 2026-27, she delivered clear and promising news. She stated India will provide a tax holiday until 2047. This applies to foreign companies offering global cloud services via Indian data centres.
The announcement brings much-needed clarity. Vaibhav Gupta, a tax partner at Dhruva Advisors, highlighted its importance. He said it lends stability to the tax position of foreign companies in India until 2047. They no longer need to worry about potential taxes on global income linked to data centre use.
This policy is a strategic play. India is positioning itself as a global data hub. The long-term tax holiday is a powerful incentive. It signals a stable and welcoming environment for major international cloud providers.
Investment in Indian data infrastructure is already substantial. Google committed $15 billion last October for an AI data centre project in Andhra Pradesh. Tech giants Microsoft and Amazon have also poured billions into their own Indian data centre networks.
The push is not just from foreign players. Domestic conglomerates are heavily involved too. Giants like Adani and Reliance are making significant investments in the data centre space. This creates a robust and competitive national infrastructure.
Reactions from the major tech companies are pending. Amazon, Microsoft, and Google did not immediately comment on the new tax measure. Their future statements will be closely watched by the market and analysts.
The government’s vision is clear and ambitious. IT Minister Ashwini Vaishnav spoke to reporters about the strategic importance. He stated that data centres will be a major strength for India. Through them, the country can provide new services to the entire world.
This move is about more than just tax breaks. It’s about building a foundational digital economy. By securing long-term commitments from global firms, India aims to become an indispensable node in the global cloud network.
The 20-year horizon provides unparalleled predictability. For corporations planning decade-long investments, this stability is golden. It allows for confident, long-range strategic planning and capital allocation.
Ultimately, the policy is a win-win proposition. Foreign companies gain a tax-efficient, large-scale operational base. India gains jobs, technology transfer, and a solidified role in the digital future.
The data centre landscape in India is set for accelerated growth. With legal uncertainties removed, the floodgates for investment could open wider. This could trigger a new wave of technological expansion across the country.
India’s digital ambitions are taking concrete shape. This tax holiday is a cornerstone policy for that vision. It firmly places the country on the map for global cloud and data service provisioning.