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India takes a major step to strengthen its future in technology. The Union Budget 2026 has announced a long-term tax break to attract global cloud and AI companies. The government will offer a data centre tax holiday until 2047. This decision aims to make India a global base for cloud computing and artificial intelligence.
Finance Minister Nirmala Sitharaman shared the plan during the Budget speech. The central government now bets big on robust digital systems, as they're crucial for future growth. Data centres play a key role in cloud services, online platforms, and AI tools. The roadmap is clear: India wants to become a major base for these services.
The new tax rule helps foreign companies that use data centres in India to serve customers across the world. These companies will not pay tax on such income until 2047. To serve Indian customers, the companies must work through an Indian reseller firm. The decision supports local businesses and keeps operations linked to India.
The latest Budget also introduced a 15% safe harbour rule that applies when a company takes the help of a related Indian data centre firm. It brings clarity on costs and helps companies plan investments without confusion or risk.
Big technology companies have already shown interest in India. Google announced a $15 billion plan to build an AI data centre in Visakhapatnam, Andhra Pradesh. The campus will have a capacity of 1 gigawatt. The project shows strong trust in India’s tech market and talent pool.
The government also shared plans beyond data centres. The Budget announced rare earth corridors in Odisha, Tamil Nadu, Kerala, and Andhra Pradesh. Rare earth materials are used in mobile phones, electric vehicles, and defense equipment. These corridors will support mining, processing, and manufacturing within India.
Another major announcement came under the India Semiconductor Mission 2.0. The government has set aside Rs. 40,000 crore for this mission. The focus will remain on making chips, equipment, and materials in India. Strong semiconductor supply supports data centres and advanced computing.
Experts believe the tax holiday will attract large investments over time. Data centres create jobs in construction, power supply, cooling systems, and IT services. Indian IT companies can also benefit by working closely with global cloud firms.
Some concerns remain around power use and water demand. Data centres consume high energy. Sustainable planning will remain important. However, the long tax break sends a clear message to global investors.
The data centre tax holiday till 2047 shows India’s clear focus on technology growth. By supporting AI infrastructure, encouraging cloud investment, and offering a strong tax incentive, India aims to become a major global digital hub in the long run.
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