TLDR
- India will offer a 20-year tax exemption for hyperscalers using local data centers for global cloud services.
- The exemption removes the 35% corporate tax previously applied to foreign firms operating via local establishments.
- Firms like TCS, Infosys, Wipro, and Jio are expected to benefit from increased demand and investment.
- Google, Microsoft, and Amazon have announced major AI and cloud infrastructure projects in India.
- India’s government aims to position the country as a global AI and cloud services hub by 2047.
India will offer a 20-year tax exemption for global hyperscalers using local data centers to deliver cloud services internationally. The announcement was made during the Union Budget speech by Finance Minister Nirmala Sitharaman.
Hyperscalers Gain From Reduced Tax Burden
According to a CNBC report, the exemption removes corporate tax exposure for foreign cloud companies operating through local data center developers in India. Before this change, these operations were taxed as permanent establishments at a rate of 35% plus surcharges. This adjustment makes India more competitive with hubs such as Singapore, the UAE, and Ireland.
According to Kumarmanglam Vijay of JSA Advocates, the earlier tax rules limited global deployment through India. Riaz Thingna from Grant Thornton Bharat stated the move could make India a cheaper base for global workloads. He added, “This proposal will significantly increase the hyperscaler demand.”
The tax holiday applies when global firms use data centers built and operated by Indian developers. The exemption will remain in place until 2047. The government believes this step will directly boost data center investments across the country.
AI Investments and Local Cloud Ecosystem to Expand
The exemption is expected to benefit Indian firms such as TCS, Infosys, Wipro, HCL Tech, and Jio. Raju Vegesna of Sify Technologies said the move supports cost-effective data capacity creation for Indian infrastructure developers. These companies are already expanding their presence in cloud services and infrastructure.
Tech firms have responded with major investment announcements in India’s AI ecosystem. Google has partnered with AdaniConneX to build a $15 billion data center in southern India. Microsoft and Amazon pledged over $50 billion combined toward cloud infrastructure in late 2023.
India’s Electronics Minister Ashwini Vaishnaw said India is progressing across five AI layers: applications, models, chips, infrastructure, and energy. Deep AI workloads are driving global data center demand, with over $61 billion invested in 2025 alone. India aims to attract more of that investment under its new tax regime.
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