Budget offers tax holiday for global cloud cos using Indian data centres

New Delhi: The Union Budget on Sunday proposed a tax holiday until 2047 for foreign companies offering cloud services to global customers using data centres located in India, underscoring the govern-ment’s push to position the country as a major hub for artificial intelligence and digital infrastructure.

Finance Minister Nirmala Sitharaman said the incentive aims to boost investment in critical data centre infrastructure and encourage global cloud service exports from India. To qualify, foreign firms must serve overseas clients from India-based data centres, while ser-vices to Indian customers will be routed through an Indian reseller entity. The Budget also provides a safe harbour margin of 15 per cent on costs where data centre services are offered by a related entity.

The move comes as India prepares to take centre stage in global AI discussions, with New Delhi set to host the India AI Impact Summit from February 16–20, 2026. The event, to be held at Bharat Man-dapam, is expected to bring together global leaders, ministers, CEOs and academics from across the world.

Data centres, which house servers that store, process and transmit digital data, are increasingly viewed as critical infrastructure, comparable to roads and power plants, amid rapid growth in AI, cloud compu-ting and digital payments. IT Minister Ashwini Vaishnaw recently said nearly $70 billion has already flowed into India’s AI in-frastructure layer, with investments expected to double by the end of the Summit. Major technology firms such as Microsoft and Google have pledged billions of dollars to build large-scale data centres and sovereign AI infrastructure in the country.

Industry leaders welcomed the Budget proposals, saying they provide long-term policy clarity, strengthen India’s digital backbone and reinforce its ambition to emerge as a trusted global hub for cloud services, AI execution and data-driven platforms.