Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2026–27 live in Parliament, announced a major policy push aimed at accelerating the growth of information technology and artificial intelligence in India, unveiling a tax holiday until 2047 for companies offering cloud services through data centres set up in the country.

The move is designed to strengthen India’s digital infrastructure and attract long-term global investment. Sitharaman said the government recognises the urgent need to build critical technology infrastructure as India positions itself as a global hub for cloud computing and AI services.

Under the proposal, foreign companies providing cloud services to global customers using data centres located in India will be eligible for the tax holiday. However, such firms will be required to serve Indian customers through an Indian reseller entity. The finance minister also announced a safe harbour margin of 15 per cent on costs in cases where data centre services are provided by a related entity, offering greater tax certainty to investors.

The announcement builds on recent momentum in the sector. Last year, Google committed $15 billion over five years to establish a large-scale artificial intelligence data centre campus in Visakhapatnam, Andhra Pradesh. The proposed 1-gigawatt facility was widely seen as a significant boost to India’s ambitions in advanced computing and AI, areas where the country is looking to rapidly scale up its global footprint.