Incentive till 2047 aims to anchor hyperscalers, boost data centres, and strengthen digital infrastructure
The Union Budget 2026 delivers a long-anticipated boost to India’s cloud and data centre ambitions. Finance minister Nirmala Sitharaman announced a tax holiday till 2047 for foreign companies providing global cloud services from data centres located in India.
Tax Holiday with Local Routing شرط
Why tie incentives to Indian resellers?
The tax break applies only if services are routed through an Indian reseller entity, aligning global scale with domestic participation.
- The move targets digital infrastructure deepening, not just data localisation.
- It also prioritises entities serving Indian customers via local partners.
Alongside this, a 15% cost-based Safe Harbour will apply for related-party data centre entities, offering predictability on transfer pricing.
Policy Continuity from National Data Centre Policy 2025
Was this expected?
Yes. The National Data Centre Policy 2025 draft, released in September 2025, had already signalled that the government was considering tax exemptions for up to 20 years.
- Budget 2026 operationalises that intent.
- The 2047 horizon mirrors India’s long-term digital sovereignty goals.
Think of it as regulatory certainty—critical for capital-heavy infrastructure with long payback cycles.
Industry View: Jobs, Density, and Global Standing
What does the industry expect next?
According to Surajit Chatterjee, India MD at CapitaLand Investment, the incentive could:
- Enable sustainable, high-density data centre infrastructure.
- Create high-quality tech employment.
- Strengthen India’s role in the global digital economy.
Hyperscalers Double Down on India
Who’s already betting big?
India’s data centre momentum is drawing global capital.
- OpenAI has announced plans for a 1 GW data centre in India to store domestic and regional data.
- It is also in advanced discussions with Tata Consultancy Services to build AI compute infrastructure and co-develop agentic AI solutions.
Meanwhile, hyperscale and domestic majors—including NTT Data, Reliance Industries, Amazon Web Services, and Google—have announced hefty investments to expand India data centre capacity.
The logic is simple: data gravity follows users, and India has both scale and growth.
Electronics and Infrastructure: The Adjacent Bets
Why does this matter beyond cloud?
The Budget also raised the Electronics Component Manufacturing Scheme (ECMS) outlay to INR 40,000 Cr, 1.75X the earlier allocation—supporting hardware that powers data centres.
- Additionally, a new scheme aims to strengthen construction and infrastructure equipment (CIE) manufacturing for high-value, tech-intensive equipment.
Digital infrastructure, after all, runs on steel, silicon, and stable policy.
TL;DR
Budget 2026 offers a tax holiday till 2047 for global cloud firms using India-based data centres, signalling long-term policy certainty to attract hyperscalers.
AI summary
- Tax holiday till 2047 for foreign cloud providers
- Mandatory routing via Indian resellers
- 15% Safe Harbour for data centre entities
- Builds on National Data Centre Policy 2025
- Hyperscalers accelerate India investments
