India offers 20-year tax break to lure data centres
India will grant a tax holiday until 2047 for foreign firms providing global cloud services using data centres in India, aiming to boost investment
India’s government has announced a major investment incentive by granting a tax holiday lasting more than 20 years to foreign companies that use data centres built and located in India to provide services to customers worldwide. The policy is intended to provide tax clarity and attract technology investment, supporting India’s push to become a global hub for digital infrastructure.
The announcement came on Sunday amid concerns among foreign companies using data centres in India that the government could in future seek to tax their global income simply because they rely on data infrastructure within the country — even if their customers are outside India.
India’s finance minister, Nirmala Sitharaman, confirmed the policy during the 2026–27 budget presentation, stating that the government will provide tax exemption until 2047 for any foreign company that provides cloud services to customers globally by using data centre services from India.
Tax specialists said the move would significantly reduce legal uncertainty. Vaibhav Gupta, a partner at Dhruva Advisors, said the announcement provides clarity and tax stability for foreign companies through to 2047, easing fears of being assessed on worldwide income due to the use of India-based data centres.
In recent years, India has seen substantial investment in data centre construction by multinational technology companies as well as domestic business groups.
Google announced in October that it plans to invest US$15 billion in an AI-related data centre project in the Indian state of Andhra Pradesh, while Microsoft and Amazon have also committed billions of dollars to data infrastructure in India.
At the same time, major Indian conglomerates including Adani Group and Reliance Industries have continued investing in the data centre business, reflecting intensifying competition for a foothold in a rapidly expanding digital industry.
India’s IT minister, Ashwini Vaishnaw, said data centres will become a key national strength and serve as a foundation for developing new services to meet future global market demand.
Amazon, Microsoft and Google had not immediately issued official comments on the tax exemption announcement.
