NEW DELHI: India announced Sunday it will offer foreign cloud providers zero taxes through 2047 on services sold outside the country if those workloads run from Indian data centers, in an aggressive bid to capture the next wave of artificial intelligence infrastructure investment.
Finance Minister Nirmala Sitharaman unveiled the tax holiday in India’s annual budget, targeting revenues from cloud services operated from Indian facilities but sold internationally. Services to domestic customers must be routed through locally incorporated resellers and taxed normally. The budget also proposes a fifteen-percent cost-plus safe harbor for Indian data center operators serving related foreign entities.
The announcement comes as Amazon, Google, and Microsoft race to expand AI computing capacity globally. Google committed fifteen billion dollars in October 2025 to build an AI hub in India, while Microsoft pledged seventeen-point-five billion dollars through 2029. Amazon plans to invest an additional thirty-five billion dollars by 2030, raising its total Indian commitment to seventy-five billion dollars.
India’s domestic sector is also expanding rapidly. Digital Connexion, backed by Reliance Industries and Brookfield Asset Management, announced an eleven-billion-dollar investment to develop a one-gigawatt AI data center campus in Andhra Pradesh. Adani Group plans to invest up to five billion dollars alongside Google.
However, power shortages, high electricity costs, and water scarcity pose significant challenges. India’s data center capacity is projected to grow from one gigawatt currently to over eight gigawatts by 2030, requiring more than thirty billion dollars in capital investment.
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