India Unveils Two-Decade Tax Exemption to Boost Data Centre Investments

India’s government has announced a significant tax incentive aimed at attracting global technology firms to strengthen the country’s digital infrastructure. Under the proposal outlined in the 2026-27 federal budget, foreign companies that use data centres located in India to deliver cloud services worldwide will be exempt from paying corporate taxes on that business until 2047.

The measure, unveiled by Finance Minister Nirmala Sitharaman, is designed to address concerns among international firms that reliance on Indian data infrastructure could expose them to future tax liabilities on income earned outside the country. By providing 20 years of tax relief, the government aims to provide certainty around the treatment of global income tied to Indian data centre usage.

Industry specialists welcomed the move as a step toward long-term clarity for foreign investors. Tax advisors have noted that without such a guarantee, companies might have faced potential disputes over whether India could tax worldwide profits simply because digital activity was supported by local data facilities.

Major global technology players have already been expanding their presence in India’s data centre landscape. For example, Google recently committed US$15 billion to establish a large-scale AI and data centre project in Andhra Pradesh, while other multinational firms have also been investing heavily in Indian infrastructure. Indian conglomerates, including Adani Group and Reliance Industries, have likewise accelerated their involvement in the sector.

India’s Minister for Electronics and Information Technology, Ashwini Vaishnaw, said that data centres will be fundamental to the country’s ability to develop and deliver advanced digital services on a global scale. The government’s tax exemption is intended to cement India’s appeal as a competitive destination for cloud and related digital investments.