"As the global race to build AI infrastructure accelerates, India has offered foreign cloud providers zero taxes through 2047 on services sold outside the country if they run those workloads from Indian data centers - a bid to attract the next wave of AI computing investment, even as power shortages and water stress threaten expansion in the South Asian nation."
"On Sunday, India's finance minister Nirmala Sitharaman announced (PDF) the proposal in the country's annual budget, offering a tax holiday - effectively zero taxes - on revenues from cloud services sold outside India if those services are run from data centers in the country. Sales to Indian customers would have to be routed through locally incorporated resellers and taxed domestically, she told parliament. The budget also proposes a 15% cost-plus safe harbour for Indian data-center operators providing services to related foreign entities."
"The announcement comes as U.S. cloud giants including Amazon, Google, and Microsoft race to add data-center capacity worldwide to support the surge in artificial-intelligence workloads, with India emerging as an increasingly attractive location for new investment. The country offers a large pool of engineering talent and growing demand for cloud services, and has positioned itself as a key alternative to the U.S., Europe, and parts of Asia for expanding compute infrastructure."
India proposed a tax holiday through 2047 for foreign cloud providers on revenues from services sold outside India if those services are run from data centers located in the country. Sales to Indian customers must be routed through locally incorporated resellers and taxed domestically. The budget also proposes a 15% cost-plus safe harbour for Indian data-center operators providing services to related foreign entities. U.S. cloud giants have announced major India investments—Google $15 billion, Microsoft $17.5 billion, and Amazon an additional $35 billion—reflecting India's engineering talent and demand. Power shortages and water stress threaten capacity expansion.
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