The Union Budget on Sunday proposed a tax holiday until 2047 for overseas corporations that present cloud companies to clients globally using data centres situated in India, signalling the federal government’s push to make the nation a serious hub for AI and digital infrastructure.
The large push on data centres comes at a time when India is gearing up to take the centrestage in global discourse on Synthetic Intelligence. It’s anticipated to place India not simply as a shopper of global cloud and AI companies, however as a thriving base for the world’s digital spine.
By linking tax advantages to serving global clients from India, the coverage seeks to flip the nation into an export hub for cloud computing.
Presenting the Union Budget 2026-27, Finance Minister Nirmala Sitharaman mentioned: “Recognising the necessity to allow important infrastructure and increase funding in data centres, I suggest to present tax holiday until 2047 to any overseas firm that gives cloud companies to clients globally by using data centre companies from India.” It’s going to, nevertheless, want to present companies to Indian clients by way of an Indian reseller entity.
“I additionally suggest to present a secure harbour of 15 per cent on value in case the corporate offering data centre companies from India is a associated entity,” the FM mentioned.
Put merely, data centres are safe amenities crammed with highly effective computer systems and servers that retailer, course of and transmit digital data behind companies starting from emails and banking all the best way to streaming and cloud platforms.
The data centres, which resemble fortified bases, run on specialised infrastructure, from uninterrupted energy provide to superior cooling and round the clock monitoring (even one minute of downtime can have an effect on hundreds of thousands of customers).
With AI, cloud computing and digital funds rising, data centres have gotten as important as roads and energy crops, forming the spine of India’s digital financial system.
India is eyeing a number one position in global AI conversations with New Delhi all set to host the India AI Influence Summit, the first-ever within the Global South.
The mega convention scheduled from February 16–20, 2026, at Bharat Mandapam, New Delhi, will mark the most important congregation on AI on the earth until date, bringing collectively 15 global leaders and Heads of State/Authorities, over 40 Ministers, 100s of main CEOs and CXOs, and eminent teachers from all around the world.
IT Minister Ashwini Vaishnaw, earlier this week, famous that investments value almost USD 70 billion are already flowing into the AI infrastructure layer, with the potential to double by the conclusion of the Summit.
Final 12 months, large tech corporations Microsoft and Google grabbed headlines as they collectively pledged billions of {dollars} in contemporary capital to construct out gigawatt-scale data centres and sovereign AI infrastructure in India.
Sindhu Gangadharan, SAP Labs India and Chairperson, Nasscom, mentioned the Budget strengthens the coverage spine required for India to function as a global expertise and AI execution hub.
“The deal with cloud infrastructure and long-term readability for cloud companies straight addresses a core constraint in scaling enterprise platforms, the power to run regulated, data-intensive workloads with confidence and continuity,” Gangadharan mentioned.
She added that for GCCs, this creates the circumstances to transfer past supply into possession, the place India more and more designs, builds, and runs core platforms and mission-critical methods for global enterprises.
S Anjani Kumar, Accomplice, Deloitte India, famous the Budget treats AI as a horizontal enabler for the entire financial system. It explicitly positions it as a pressure multiplier for higher governance alongside structural reforms and monetary‑sector deepening.
The tax holiday alerts a guess on India as an extended‑time period compute hub, which is the infrastructure spine for all of this AI adoption, Kumar added.
Piyush Prakashchandra Somani, Promoter, Managing Director and Chairman, ESDS, noticed that the tax holiday for cloud companies with native data centres is a well timed and strategic transfer that reinforces India’s dedication to data sovereignty and a resilient digital financial system.
“By straight incentivising home data centre operations, the federal government isn’t solely accelerating investments in India-based cloud infrastructure but in addition making a stronger basis of belief, safety, and compliance for enterprises.
“This coverage will encourage cloud suppliers to scale regionally, cut back dependence on offshore data storage, and place India as a most well-liked global hub for safe, compliant, and future-ready cloud companies,” Somani added.
Revealed on February 1, 2026
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