What incentives does Union Budget 2026 offer to the data center sector in India?

Union Budget 2026 proposes a tax holiday until 2047 for foreign companies providing cloud services if they use Indian data center services, and a 15% safe harbor on cost for related entity data center service providers.

How much investment is projected for India's data centers, and which companies are involved?

Investments in India's data centers are projected to reach $90 billion, with major companies like Reliance Industries, Larsen & Toubro, Google, Amazon, and Microsoft making significant commitments.

What are the key drivers for the growth of the data center industry in India?

The industry's growth is driven by the rapid adoption of public cloud, growing investments in AI technologies, and the proliferation of 5G technology leading to demand for low latency applications.

Home / Business and Economy / India's Data Centers Booming: Budget Fuels $90B AI Investment

India's Data Centers Booming: Budget Fuels $90B AI Investment

9 Feb

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Summary

Union Budget 2026 offers tax holidays for foreign cloud firms using Indian data centers.
Investments in Indian data centers are projected to reach $90 billion.
Major companies like RIL, L&T, Google, and AWS are significantly investing in new facilities.

India's Data Centers Booming: Budget Fuels $90B AI Investment

Union Budget 2026 is set to invigorate India's booming data center sector with tax incentives and a projected $90 billion in investments. Foreign companies providing cloud services in India will benefit from a tax holiday until 2047 if they utilize local data center services. This move aims to solidify India's position in the global AI infrastructure landscape.

Significant investments are already underway, with Reliance Industries and Larsen & Toubro announcing multi-billion dollar projects. Reliance's Digital Connexion plans to invest $11 billion over five years for a 1 GW data center in Visakhapatnam. L&T will invest $2.5 billion to establish five data centers, including one in Visakhapatnam, with expansion into Chennai, Mumbai, and Bengaluru.