Union Finance Minister Nirmala Sitharaman on Sunday announced a tax holiday till 2047 for any foreign company providing cloud services to global customers by setting up data centers in India.
The move seeks to enable critical infrastructure and increase investment in data centers. (Pixabay/Representative)”Recognizing the need to enable critical infrastructure and increase investment in data centres, I propose to give a tax holiday till 2047 to any foreign company that provides cloud services to global customers using data center services from India,” Sitharaman said in his budget speech.
He also added that companies supplying data center services to their own group firms from India would get tax guarantees, with the government allowing a certain 15% profit margin on costs to be considered acceptable, reducing the risk of transfer pricing disputes.
In a media briefing after presenting the budget, Information Technology and Electronics Minister Ashwini Vaishnab said that India has secured around $90 billion in pledged investments for AI-related infrastructure. He added that around $70 billion worth of projects are already underway. Vaishnav said the total investment could double by the time the AI Impact Summit kicks off next month, and could soon reach $200 billion as more pledges come in.
“India will emerge as one of the world’s largest hubs for artificial intelligence. We already have the second largest pool of AI talent globally and rank among the top three countries in the field,” Vaishnav said. “We are also seeing a lot of interest from AI server manufacturers who want to build in India… as well as a lot of interest to ATMP for AI chips in India. Finally, we are looking at having our own AI chips.”
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Current investments include Google’s $15 billion for an AI and data center hub in Visakhapatnam, Microsoft’s $20.5 billion in cloud infrastructure and Amazon’s $35 billion for AI, cloud and data-related projects. The remaining investment commitments are from small data service providers based in India.
Puneet Chandak, president of Microsoft India and South Asia, said the long-term policy assurance recognizes that digital infrastructure is now strategic national infrastructure. “As the pace of AI adoption accelerates across sectors, secure and resilient computing power will underpin public services, enterprise innovation and long-term competitiveness,” he said.
“At Microsoft, our commitments in India are closely aligned with this direction. We are expanding hyperscale cloud and AI infrastructure into new regions, while continuing to invest in efficiency at scale. Our efforts aim to support India’s transformation from digital public infrastructure to AI public infrastructure, enabling trusted, inclusive innovation with impact across the country.”
There was no immediate response from Google and Amazon to HT’s requests for comment.
