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Union Finance Minister Nirmala Sitharaman on Sunday presented the Union Budget 2025-26 where she proposed a tax break until 2047 to foreign companies looking towards setting up infrastructure in India to capitalise on the boom in data centres and encourage more tech start ups led by the adoption of artificial intelligence.
“Recognising the need to enable critical infrastructure and boost investment in data centres, I propose to provide tax holiday till 2047 to any foreign company that provides cloud services to customers globally by using data centre services from India. It will, however, need to provide services to Indian customers through an Indian reseller entity,” the Finance Minister said in her Union Budget 2026-27 speech Sunday.
“I also propose to provide a safe harbour of 15 per cent on cost in case the company providing data centre services from India is a related entity,” she added.
During the World Economic Forum in Davos Ashwini Vaishnaw said that private investments in India’s AI infrastructure could double from last year’s $70 billion by the end of the ongoing financial year (FY26).
He also emphasised India’s role in AI and how India is significantly growing in the tech sector. A research note by S&P Global from 2024 estimated that more than $100 billion will be invested in such facilities in the region over the next five years.
Data centres satiate one of the most important aspects of AI demand – the need for computing power. Computing capacity, or compute, is among the most important elements of building a large AI system, apart from algorithmic innovation and data sets.
Investment in critical infrastructure that will play a bigger role in the future was one of the themes of the budget and Sitharaman also announced that dedicated rare earth corridors will be set up in four states - Tamil Nadu, Kerala, Odisha and Andhra Pradesh.
"The scheme for rare earth permanent magnets was launched in November 2025. We now propose to support the mineral-rich states of Odisha, Kerala, Andhra Pradesh and Tamil Nadu to establish dedicated rare earth corridors to promote mining, processing, research and manufacturing," the finance minister said.
“Recognising the need to enable critical infrastructure and boost investment in data centres, I propose to provide tax holiday till 2047 to any foreign company that provides cloud services to customers globally by using data centre services from India. It will, however, need to provide services to Indian customers through an Indian reseller entity,” the Finance Minister said in her Union Budget 2026-27 speech Sunday.
“I also propose to provide a safe harbour of 15 per cent on cost in case the company providing data centre services from India is a related entity,” she added.
During the World Economic Forum in Davos Ashwini Vaishnaw said that private investments in India’s AI infrastructure could double from last year’s $70 billion by the end of the ongoing financial year (FY26).
He also emphasised India’s role in AI and how India is significantly growing in the tech sector. A research note by S&P Global from 2024 estimated that more than $100 billion will be invested in such facilities in the region over the next five years.
Data centres satiate one of the most important aspects of AI demand – the need for computing power. Computing capacity, or compute, is among the most important elements of building a large AI system, apart from algorithmic innovation and data sets.
Investment in critical infrastructure that will play a bigger role in the future was one of the themes of the budget and Sitharaman also announced that dedicated rare earth corridors will be set up in four states - Tamil Nadu, Kerala, Odisha and Andhra Pradesh.
"The scheme for rare earth permanent magnets was launched in November 2025. We now propose to support the mineral-rich states of Odisha, Kerala, Andhra Pradesh and Tamil Nadu to establish dedicated rare earth corridors to promote mining, processing, research and manufacturing," the finance minister said.
