Union Finance Ministry offers 20-year tax holiday to foreign cloud firms using Indian data centres

Key facts

• Union Finance Minister Nirmala Sitharaman in Budget 2026 proposed a 20-year tax holiday, valid up to 2047, for foreign companies providing cloud services to global customers from data centres located in India.
• Eligible foreign cloud firms must serve Indian customers only through an Indian reseller entity.
• The Budget proposes a 15% safe harbour on cost when data centre services are supplied by a related entity of the foreign cloud company.
• Google, Microsoft, and Amazon Web Services together committed about USD 40 billion in India data centre investments during 2025.
• Global hyperscalers and Indian conglomerates Reliance, Adani, Tata, and L&T plan to invest more than USD 70 billion in India’s data centre industry over the next five to seven years, raising total capacity from 1 GW to about 9 GW.
• India’s data consumption rose from 8 exabytes in FY17 to 229 exabytes in FY25, driven by OTT platforms, digital payments, social media, and ecommerce.