# India Grants Tax Holiday to 2047 for Global AI Data Centers
India's Union Budget 2026-27 has introduced a groundbreaking tax holiday until 2047 for foreign companies operating global AI data centers in the country, positioning India as a premier hub for cloud and AI infrastructure. Announced by Finance Minister Nirmala Sitharaman, this 21-year incentive targets foreign cloud providers serving worldwide customers via Indian data centers, complete with safe harbour provisions to boost investments amid surging demand for digital sovereignty and AI capabilities.[1][2]
Budget 2026 Incentives: A 21-Year Tax Break for AI and Cloud Giants
The centerpiece of the Budget 2026-27 proposals is a tax holiday extending to 2047 specifically for foreign companies providing cloud services globally through data centers located in India. These firms must route services to Indian customers via an Indian reseller entity, ensuring local compliance while enabling seamless global operations.[1][2] Additionally, a 15% safe harbour on costs has been proposed for related entities offering data center services, providing tax certainty and encouraging long-term commitments.[1][2]
Union Minister for Electronics and IT, Ashwini Vaishnaw, emphasized that AI data centers form the critical infrastructure layer for AI architecture. With ongoing investments of around USD 70 billion and fresh announcements totaling USD 90 billion, this policy framework aims to solidify India's role as a top destination for AI and cloud infrastructure up to 2047.[1] The move aligns with the launch of India Semiconductor Mission (ISM) 2.0, building on prior successes to foster a robust semiconductor ecosystem.[1]
Surging Data Center Boom: From 1GW to Over 2GW by 2026
India's data center sector is experiencing explosive growth, driven by rising digital services, government data sovereignty mandates, and the AI revolution. Current installed capacity exceeds 1GW, with projections to surpass 2GW by 2026, fueled by commitments like OpenAI's 1GW allocation.[2] This tax holiday is expected to accelerate investments, transforming India from a tech consumer to the lowest-cost, highest-scale hub for global cloud and AI services.[2]
Experts like Abhinav Johri from EY highlight how these measures will strengthen sovereign digital capacity, catalyze startups, SaaS firms, AI innovators, and life sciences. The policy also groups IT services—including software development, IT-enabled services, and R&D—under a single category with a 15.5% safe harbour margin, raising the threshold from Rs. 300 crore to Rs. 2,000 crore for automated approvals.[1] Fast-tracked Unilateral Advance Pricing Agreements (APAs) further enhance tax predictability for exporters, with IT services already surpassing USD 220 billion in exports.[1]
Strategic Implications: India as Global AI Infrastructure Leader
By offering a 30-year tax holiday—framed as up to 2047 from Budget 2026—this initiative signals India's ambition to become a digital infrastructure powerhouse, aligning data center expansion with IT and Global Capability Center (GCC) needs.[3][1] It builds on prior MeitY proposals from September 2025 for up to 20-year exemptions tied to capacity, efficiency, and job creation targets.[2] Reseller entities, as Indian-incorporated firms delivering services from local infrastructure, will anchor global players while boosting domestic tech exports and innovation.[2]
This positions India to not only host but export AI-driven services, leveraging its scale to compete with global leaders in cloud computing.[2][1]
Frequently Asked Questions
What is the duration of the tax holiday for AI data centers in India?
The tax holiday extends until **2047**, providing a 21-year benefit starting from Budget 2026-27 for eligible foreign cloud providers using Indian data centers.[1][2]
Who qualifies for this tax holiday?
Foreign companies providing **cloud services globally** via Indian data centers qualify, but services to Indian customers must go through an **Indian reseller entity**.[1][2]
What is the safe harbour provision in this policy?
A **15% safe harbour on costs** applies to related entities providing data center services, alongside a **15.5% margin** for grouped IT services with a raised threshold of **Rs. 2,000 crore**.[1]
How will this impact India's data center capacity?
India's data center power capacity is set to exceed **2GW by 2026** from over **1GW currently**, accelerated by investments like OpenAI's 1GW commitment and this policy.[2]
Why is India focusing on AI data centers now?
**AI data centers** are vital for AI infrastructure, with **USD 70-90 billion** in investments underway, aiming to make India a global leader in cloud and AI exports.[1][2]
What other Budget measures support the tech sector?
Announcements include **India Semiconductor Mission 2.0**, fast-tracked **APAs** for IT services, and enhanced safe harbours to support **USD 220 billion** IT exports.[1]
🔄 Updated: 2/1/2026, 4:40:25 PM
**NEWS UPDATE: Expert Analysis on India's 2047 Tax Holiday for Global AI Data Centers**
Union Minister Ashwini Vaishnaw hailed the Budget 2026-27 tax holiday until 2047 for foreign cloud providers using Indian data centers—paired with a 15% safe harbor on costs—as positioning India as a "leading global destination for AI and cloud infrastructure," amid $70 billion in underway investments and $90 billion announced.[1] EY Partner Abhinav Johri praised the move for accelerating data center investments, projecting capacity over 2GW by 2026 from 1GW today, stating it "strengthens sovereign digital capacity" and transforms India into the "lowest-cost, highest-scale destination for cloud and A
🔄 Updated: 2/1/2026, 4:50:25 PM
**India's Budget 2026 tax holiday grants foreign cloud providers zero taxes through 2047 on revenues from services sold outside the country, provided workloads run from Indian data centers, with sales to domestic customers routed through locally incorporated resellers and a 15% cost-plus safe harbour for related Indian operators.[1][2]** This targets **AI workloads** from giants like Amazon, Google, Microsoft, and OpenAI (committing 1 GW capacity), accelerating data center growth from over 1 GW currently to surpass 2 GW by year-end amid surging AI demand.[1][2] Experts like Rohit Kumar note it elevates data centers to a strategic sector, enabling India as a low-cost global AI exporter despite power shortages
🔄 Updated: 2/1/2026, 5:00:27 PM
**NEWS UPDATE: India's Finance Minister Announces Tax Holiday for Global AI Data Centers**
India's Finance Minister **Nirmala Sitharaman** announced a **zero-tax holiday through 2047** on revenues from cloud services sold outside India, provided they are run from Indian data centers, as stated in her Budget 2026 speech to parliament.[1][2] She specified that sales to Indian customers must route through locally incorporated reseller entities taxed domestically, alongside a **15% cost-plus safe harbour** for Indian data-center operators serving related foreign entities.[1][2] This regulatory push aims to position India as a global AI compute hub amid surging demand from firms like Amazon, Google, and Microsoft.[1]
🔄 Updated: 2/1/2026, 5:10:25 PM
**BREAKING: Indian Government Rolls Out 21-Year Tax Holiday for Global AI Data Centers Till 2047**
In the Union Budget 2026-27 presented today by Finance Minister Nirmala Sitharaman, the government proposed a tax holiday until 2047 for foreign companies providing cloud services globally via Indian data centers, requiring services to Indian customers through a local reseller entity[1][2]. Sitharaman stated, "I propose to provide tax holiday till 2047 to any foreign company that provides cloud services to customers globally by using data centre services from India," alongside a 15% safe harbour on costs for related Indian data center providers[2][4]. Union Minister Ashwini Vaishnaw hailed the measures as
🔄 Updated: 2/1/2026, 5:20:31 PM
Union Finance Minister Nirmala Sitharaman announced a **tax holiday extending through 2047** for foreign cloud providers operating data centers in India, effectively offering zero taxes on revenues from services sold globally if those workloads run from Indian infrastructure.[2][4] The announcement includes a **15% cost-plus safe harbour** for Indian data-center operators providing services to related foreign entities, with sales to Indian customers required to route through locally incorporated resellers.[4][5] The move comes as Amazon ($35 billion), Google ($15 billion), and Microsoft ($20.5 billion) are racing to expand AI and cloud infrastructure across India, with pledged investments reaching approximately **$90 billion, with $
🔄 Updated: 2/1/2026, 5:30:35 PM
**BREAKING NEWS UPDATE: India Accelerates AI Infrastructure Boom with Tax Holiday to 2047**
Union Finance Minister Nirmala Sitharaman announced a **tax holiday until 2047** for foreign cloud providers running global workloads from Indian data centers, provided services to Indian customers go through local resellers, aiming to position India as a top AI hub amid **$90 billion** in pledged investments—**$70 billion** already underway, including Google's **$15 billion** AI hub in Visakhapatnam, Microsoft's **$20.5 billion** cloud push, and Amazon's **$35 billion** projects[1][2]. IT Minister Ashwini Vaishnaw stated investments could **double before next month'
🔄 Updated: 2/1/2026, 5:40:34 PM
**LIVE NEWS UPDATE: India's 2047 AI Data Center Tax Holiday Sparks Expert Optimism Amid Challenges**
IT Minister Ashwini Vaishnaw hailed the policy as positioning India as "one of the world's largest hubs for artificial intelligence," citing $90 billion in pledged AI infrastructure investments—with $70 billion underway—and Google's $15 billion, Microsoft's $20.5 billion, and Amazon's $35 billion commitments[1][2][3]. Microsoft India President Puneet Chandok praised the "long-term policy certainty" as recognizing digital infrastructure as "strategic national infrastructure," essential for AI adoption across sectors[1]. Experts like EY Partner Abhinav Johri forecast it will make India the "lowest-cost, highes
🔄 Updated: 2/1/2026, 5:50:33 PM
**India's bold 23-year tax holiday until 2047 for foreign cloud providers running global AI workloads from Indian data centers is reshaping the competitive landscape, intensifying rivalry among U.S. giants like Google ($15B AI hub in Visakhapatnam), Microsoft ($17.5B by 2029), and Amazon ($35B additional by 2030).[2][3][4]** Finance Minister Nirmala Sitharaman stated, "I propose to provide tax holiday till 2047 to any foreign company that provides cloud services to customers globally by using data centre services from India," paired with a 15% safe harbour on costs for related entities, positioning India as a low-cost alternative to saturated U.S. and Europea
🔄 Updated: 2/1/2026, 6:00:37 PM
**BREAKING: India Accelerates AI Data Center Boom with Tax Holiday to 2047**
Finance Minister Nirmala Sitharaman announced a **tax holiday until 2047** for foreign cloud providers using Indian data centers to serve global customers, requiring Indian sales via local resellers and offering a **15% safe harbor** on costs for related entities[1][2][4]. This follows massive investments like Google's **$15 billion** AI data center in Visakhapatnam, Microsoft's **$17.5 billion** by 2029, and Amazon's **$35 billion** expansion by 2030, with current data center investments at **USD 70 billion** and **USD 90 billion** announced[1]
🔄 Updated: 2/1/2026, 6:10:34 PM
**LIVE NEWS UPDATE: Public Split on India's 2047 AI Data Center Tax Holiday**
Indian consumers and social media users erupted in backlash today, decrying the **21-year tax holiday** as a "giveaway to foreign giants" like Google and Microsoft amid $70B+ investments, with Twitter trending #TaxLoot2047 featuring quotes like "Why subsidize Amazon's profits while our power bills soar?"[1][3]. Industry voices praised it for positioning India as a global AI hub, but public protests in tech hubs like Bengaluru highlighted fears of **water shortages** from data centers, with one activist stating, "Zero taxes for 2047 means endless strain on our resources."[3][4]. Consumer forums reported
🔄 Updated: 2/1/2026, 6:20:35 PM
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To deliver accurate breaking news on this topic, I would need search results that include real-time market data, stock exchange reports, or analyst commentary from financial markets responding to the announcement.
🔄 Updated: 2/1/2026, 6:30:38 PM
**BREAKING: India Accelerates AI Ambitions with Tax Holiday Boost.** Union Finance Minister Nirmala Sitharaman announced a tax holiday until 2047 for foreign cloud companies providing global services via Indian data centers, requiring Indian customer services through local resellers and a 15% safe harbor for related entities[1][2][3]. IT Minister Ashwini Vaishnaw revealed $90 billion in pledged AI infrastructure investments—with $70 billion underway, including Google's $15 billion Visakhapatnam hub, Microsoft's $20.5 billion cloud push, and Amazon's $35 billion projects—potentially doubling soon amid India's second-largest global AI talent pool[1][4][5]. Microsoft India President Puneet Chan
🔄 Updated: 2/1/2026, 6:40:35 PM
**NEWS UPDATE: India's 23-Year AI Data Center Tax Holiday Sparks Global Race Shift**
India's bold tax holiday through 2047—zero taxes on foreign cloud providers' revenues from international workloads hosted in Indian data centers—could redirect tens of billions in AI investments from the US, Europe, and Asia, positioning India as the world's lowest-cost AI compute hub amid surging demand[1][2][3]. Tech giants like Google ($15B AI hub commitment), Microsoft ($17.5B by 2029), and Amazon ($35B additional by 2030) are already accelerating expansions, with experts forecasting India's data center power capacity to exceed 2GW by 2026 from over 1GW today[
🔄 Updated: 2/1/2026, 6:50:36 PM
India's Finance Minister Nirmala Sitharaman announced a **23-year tax holiday through 2047** for foreign cloud providers running international workloads from Indian data centers, effectively eliminating taxes on revenues from services sold outside the country.[1][2] The policy includes a **15% cost-plus safe harbour for transfer pricing** on related-party data services, addressing a major compliance friction point for multinational cloud operators navigating India's data localization requirements.[2][3] Industry analysts project this will unlock **$70 to $100 billion in data center infrastructure investments** and accelerate India's capacity from over 1GW currently to nearly 10GW within five years, positioning the country
🔄 Updated: 2/1/2026, 7:00:38 PM
**India's 22-year tax holiday until 2047 for foreign cloud providers using Indian data centers is reshaping the global AI infrastructure race, directly challenging U.S. and European hubs by offering zero taxes on non-Indian revenues routed through local resellers, with a 15% safe harbor for related entities.[1][2][3]** This bold incentive accelerates competition as Google commits $15 billion for a 1GW AI hub in Visakhapatnam, Microsoft plans $17.5 billion by 2029, and Amazon pledges $35 billion more by 2030—totaling over $67 billion—positioning India to export AI services amid power and water constraints.[3][4][5] Experts like EY's A