New Delhi. The Government of India has taken a bold step towards making the country a technological superpower through Budget 2026-27. The objective is clear to establish India as a global hub in the field of cloud computing, data centers and Artificial Intelligence (AI). Under this strategy, a long-term tax holiday has been announced for foreign cloud service providers, which will remain in effect till 2047.
What is tax holiday?
Tax holiday means full or partial exemption from income tax for a specified period. Under this scheme, foreign cloud companies who will set up data centers in India and operate their services from here will not have to pay income tax on the income earned in India from 2026-27 to 2046-47. However, this exemption will be given on the basis of certain conditions and investment standards.
Boom in data center sector
The data center industry in India is already expanding rapidly. An estimated $70 billion of investments are in progress, while approximately $90 billion of new projects have been announced. The country’s cloud data center capacity currently stands at about 1,280 MW, which can increase four to five times by 2030. With the expansion of services like AI, 5G, digital payments and e-governance, the demand for data storage and processing is continuously increasing.
India Semiconductor Mission 2.0
India Semiconductor Mission 2.0 has also been launched in the budget to strengthen the technical infrastructure. A provision of Rs 1,000 crore has been kept for this. This initiative will focus on the design and manufacturing of machines and equipment related to semiconductor manufacturing. The receipt of 149 applications under this mission so far shows that the industry is enthusiastic about developing the semiconductor ecosystem in India.
IT sector will get tax relief
India’s IT exports are worth more than $220 billion and are considered the backbone of the country’s economy. An attempt has been made to reduce tax disputes and ease of doing business by proposing a safe harbor margin of 15.5 percent in the budget. This is expected to reduce transfer pricing disputes related to international transactions.
India’s position in global competition
In fact, competition in the field of AI and data security has intensified across the world. There is a race to set up data centers on a large scale. At such a time, this policy of India can make it an attractive destination for global investors. If this initiative delivers the expected results, India could become a major hub for cloud and AI infrastructure not just in Asia, but globally, in the coming years.
Comments are closed.