NEW DELHI: The government has unveiled a set of tax measures aimed at attracting foreign investment, boosting electronics manufacturing, and drawing global talent to India.
Finance Minister Nirmala Sitharaman announced that the tax holiday for foreign companies using Indian data centres allows any foreign service provider earning income from customers outside India to receive a full tax exemption if it uses Indian infrastructure.
According to the budget documents, this incentive, available until 2047, also allows Indian service providers linked to the foreign company to pay a safe harbour tax of 15%.
The move is expected to attract global cloud and IT companies to invest in Indian data centres, creating jobs and strengthening the country’s technological infrastructure.
A recent Jefferies report says India’s data centre capacity is expected to grow five times to 8 GW by 2030, due to rising data traffic, lower latency needs, data localisation rules, and increased use of AI. This growth will require around $30 billion in investment and could increase data centre leasing revenue to $8 billion by 2030.
Bharti Airtel, Reliance Industries, and Adani Enterprises are likely to account for 35–40% of this capacity, but many other companies are also entering the market.
Adani Enterprises recently partnered with Google to build India’s largest AI data centre campus and new green energy infrastructure in Visakhapatnam, Andhra Pradesh, with an investment of about $15 billion over five years (2026–2030). Google’s subsidiary, Raiden Info Tech, will lead the project, which is expected to create 188,000 jobs.
Google’s investment in India’s data centres was initially reported at $6 billion and has now risen to $10–15 billion.
The Finance Minister also announced a toll manufacturing exemption for electronics. Foreign companies supplying machinery or materials to manufacturers in bonded zones will not be taxed for five years.
This policy aims to boost electronics production, support exports, and help India become a global manufacturing hub. The electronics industry, especially smartphone manufacturing, has recently faced machinery shortages and supply issues from China.
The third measure provides tax relief for foreign experts coming to India for up to five years. Non-resident professionals will only be taxed on income earned in India, while income earned abroad remains exempt.
The policy targets skilled professionals such as engineers, researchers, and IT specialists, offering them tax certainty and encouraging them to contribute to Indian projects without concerns about double taxation.