India’s Big Leap Toward a Global AI Cloud Hub
India is taking a risky step toward becoming the centre of the digital world. In the 2026-27 Union Budget, Finance Minister Nirmala Sitharaman proposed a game-changing plan: a tax-free window for global IT firms that chose India as their home base for AI.
The 2047 Vision: A Zero-Tax Revolution
To secure the Future of Tech India, the government has introduced an India AI tax holiday. This means foreign cloud providers, the companies that power the apps and tools we use every day, will enjoy a zero tax regime 2047.
If these companies use Indian soil to run AI tasks for the rest of the world, they won’t pay taxes on that global income for the next 21 years. It is a massive “welcome” sign for global AI infrastructure to move to India.
Boosting Data Centre Investment in India
This policy is not about saving money; it’s about building the “factories” of the future. The goal is to spark a massive wave of data centre investment India has never seen before. By making it cheaper to build and run these facilities, India is positioning itself as the world’s “engine room” for intelligence.
Rules and Conditions to Qualify
Not everything is open-ended. To qualify:
- The services must be delivered from Indian data centres.
- Tax is still payable on services to Indian customers, which must be routed via local reseller entities.
- A 15% safe harbour margin for related data centre entity costs is also proposed to streamline compliance.
A Giant Step into the AI Future
India’s zero-tax regime through 2047 is more than a financial incentive; it’s a strategic play to win the global cloud and AI infrastructure race. By lowering fiscal barriers, enhancing investor certainty, and positioning itself as a long-term base for compute workloads, India is laying the groundwork for a new era of digital growth. If executed well with reliable infrastructure and supportive policy, this move could transform India into a premier AI powerhouse on the world stage.
