Can India’s 2047 Cloud Tax Holiday Make It a Global Data Centre and Foreign Investment Hub?

India's Union Budget 2026-27 introduced a transformative fiscal incentive that will reverberate across global cloud infrastructure markets. The government has proposed a tax holiday until 2047 for foreign companies that provide cloud services to customers worldwide using data centres located in India. This long-term exemption applies to income from global cloud operations routed through Indian data centres and offers apparent tax certainty for multinational firms. 

By dissolving tax ambiguity and offering multi-decade relief, this policy shifts India from a regional cloud market into a potential global digital infrastructure hub. The policy could profoundly impact foreign direct investment (FDI), data centre financing strategies, and competitive positioning for Indian and international technology firms. 

Fiscal Clarity Unlocks Long‑Horizon Capital Deployment 

Sector investors and multinational corporations emphasise that tax certainty over two decades is a powerful signal. A 20‑year tax exemption until 2047 offers predictability that underpins long‑term capital expenditure (CapEx) planning for data centre build‑outs. 

Global cloud leaders have already committed substantial funds to India's infrastructure landscape. For example: 

• Google committed US$15 billion to build a 1‑gigawatt AI‑focused data centre cluster near Visakhapatnam, Andhra Pradesh, one of the largest of its kind outside the U.S. 
  

• Microsoft Corporation has committed US$17.5 billion toward expanding cloud and AI infrastructure in India, including hyperscale data centre capacity. 
  

• Amazon Web Services (AWS) has committed US$12.7 billion in cloud infrastructure investment in India by 2030, expanding its Mumbai and Hyderabad regions and strengthening hyperscale capacity.

These companies already invest heavily in Indian infrastructure and stand to benefit from the new fiscal framework by expanding global-scale services from within India. 

For India's financial markets, the policy's clarity catalyses positive sentiment across technology stocks and infrastructure plays tied to cloud expansion. Following the Budget announcement, Indian IT and tech infrastructure equities rose, reflecting investor confidence in the broader digital ecosystem's growth. 

Accelerating FDI and Data Centre Capacity Build‑Out 

Foreign direct investment into India's data centre sector is expected to materialise after the Budget. The long‑duration tax incentive aligns with multi‑decade investment horizons typical for data centre campuses, which require stable regulatory regimes to justify multi‑billion‑dollar build‑outs. 

Industry reports project Indian data centre capacity to grow by up to five times, to around 8 gigawatts (GW) by 2030, necessitating roughly US$30 billion in investment to support demand driven by cloud, artificial intelligence workloads, and enterprise digital transformation. 

Several leading Indian and foreign players are actively expanding: 

• Nxtra Data (Airtel) and CtrlS Datacenters are increasing their footprint to support enterprise and global cloud workloads. 
  

• Yotta Infrastructure and AdaniConneX are developing hyperscale facilities aimed at global cloud and content delivery networks. 
  

• Major conglomerates Reliance Industries and Bharti Airtel are integrating data centre capacity expansion with telecom and 5G rollouts, creating synergies with network-edge computing. 
  

These investments span metropolitan hubs such as Delhi‑NCR, Mumbai, Bengaluru, Chennai, and Hyderabad, positioning India to handle both domestic cloud demand and cross‑border service delivery. 

Competitive Differentiation: India vs Global Cloud Hubs 

India's tax incentives aim to recalibrate the global geography of cloud infrastructure. Traditionally, enterprise data processing and cloud infrastructure have been concentrated in established hubs such as Singapore, Ireland, and select U.S. states. The 2047 tax holiday puts India on a competitive footing by lowering the effective tax burden on global service revenues relative to peer jurisdictions, where tax relief is often shorter in duration or more limited in scope. 

By coupling tax incentives with strategic infrastructure policy, India seeks to channel previously offshore workflows and workloads into local facilities, reducing latency for global clients and unlocking new business models for cloud providers. 

This advantage becomes particularly relevant for latency‑sensitive applications and AI computing. While some workloads in financial services and AI inference require proximity to end users, other segments, such as cloud storage, backup, and compute training, can be economically anchored in India, especially with extended fiscal incentives. 

Diverse Benefits Across the Data Ecosystem  

The tax holiday has knock‑on effects across the broader technology supply chain, creating opportunities for mid‑tier and startup data centre service providers as well as established hyperscalers: 

• Indian cloud resellers and managed service providers benefit from increased demand as global providers seek to meet local reseller routing requirements. 
  

• Real estate developers specialising in data centre campuses stand to capture long‑term leases and infrastructure contracts. 
  

• Power infrastructure, cooling system manufacturers, and network service providers are poised to benefit from increased demand associated with large‑scale data centre build‑outs. 
  

These developments create a multiplier effect, attracting ancillary investment, generating skilled employment, and bolstering India's resilience in digital infrastructure. 

Strategic Implications for India's Technological Sovereignty 

Beyond immediate investment flows, the tax holiday reflects a broader strategic objective: to embed India more deeply into global technology supply chains and position the nation as a critical infrastructure hub for cloud and AI workloads. This aligns with public policy emphasis on data localisation, digital sovereignty, and self‑reliant technological capability built around strategic assets. 

By offering long‑term fiscal certainty, India helps reduce barriers for foreign technology firms while ensuring the build‑out of dense, locally anchored data ecosystems that support future innovation, from generative AI to next‑generation enterprise cloud services. 

Conclusion 

India's Budget 2026‑27 has recalibrated the economics of digital infrastructure investment through a tax holiday until 2047 for foreign companies using Indian data centres to serve global customers. This unprecedented fiscal incentive is already synergising with existing investment commitments from cloud leaders such as Google, Microsoft, and Amazon to scale data centre capacity dramatically. 

By providing clarity and longevity in its tax framework, India strengthens its proposition as a global data centre and cloud infrastructure hub. The policy not only accelerates foreign investment but also catalyses a broad ecosystem of domestic providers, ancillary technology suppliers, and real estate infrastructure developers. As global demand for cloud and AI infrastructure continues its upward trajectory, India's extended tax holiday positions the country to capture a disproportionate share of incremental data centre capital flows and play a central role in the future of distributed cloud services.