Finance Minister Nirmala Sitharaman suggested a tax exemption lasting until 2047 for foreign firms offering cloud services worldwide, as long as they utilize data center services located in India.

In her Budget 2026 address, Sitharaman stated, “To draw global business and investment and acknowledge the necessity for enabling critical infrastructure, we suggest offering a tax holiday until 2047 to any foreign firm that delivers cloud services to global customers utilizing data center services from India.”

The initiative seeks to enhance India’s data framework and bolster the nation’s developing role in cloud computing and AI-driven technologies.

This implies that an international cloud provider — like those providing online storage, computing, or software services — can establish data center activities in India and generate profits from worldwide clients without incurring corporate taxes in India until 2047.

To take advantage of this, the company needs to cater to Indian customers via a local reseller organization.

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The minister stated, “We also suggest offering a secure margin of 15% on costs if the company delivering data centre services from India is an affiliated entity.”

The initiative is part of a larger government effort to enhance investment in data centres, which are regarded as essential for India's digital advancement and its goals in artificial intelligence, cloud computing, and digital public infrastructure.

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The level of expenditure indicates how pivotal India has become in worldwide computing plans. Microsoft is set to invest $17.5 billion in AI projects in India within the next four years, while Amazon aims to allocate $35 billion over five years for AI operations, and Google has pledged $15 billion to establish data centers in collaboration with Adani Group and Bharti Airtel.