India is quickly becoming a major destination in the global race to build artificial intelligence infrastructure.
With bold policy moves and massive investments from global tech giants, the country is positioning itself as a new hub for AI-driven data centers.
A Big Tax Break to Attract Global Cloud Companies
To draw global cloud service providers, India has announced a major tax incentive.
In the latest Union Budget, Finance Minister Nirmala Sitharaman revealed a tax holiday lasting until 2047 for foreign cloud companies that run overseas services from Indian data centers.
This means income earned from clients outside India will not be taxed.
However, services sold within India must go through Indian-registered companies and will be taxed locally.
The budget also offers a 15 percent cost-plus safe harbour for Indian data center firms serving their foreign partners.
This move is aimed at making India a cost-effective and attractive base for global AI and cloud operations.
Why Tech Giants Are Betting Big on India
The timing is crucial.
Global tech companies are racing to build more data centers to support AI workloads.
Many traditional markets in the US and Europe are already crowded and expensive.
India offers a strong alternative.
It has a large pool of skilled engineers, growing demand for cloud services, and supportive government policies.
Google has committed $15 billion to expand data centers and build an AI hub.
Microsoft plans to invest $17.5 billion by 2029. Amazon has increased its total planned investment in India to around $75 billion by 2030.
Indian Companies Join the AI Infrastructure Push
Indian business groups are also stepping up.
Digital Connexion, backed by Reliance Industries, Brookfield, and Digital Realty, plans to invest $11 billion in a large AI-focused data center campus in Andhra Pradesh by 2030.
The Adani Group has announced plans to invest up to $5 billion in partnership with Google.
These projects signal strong confidence in India’s long-term AI and data center growth.
Challenges That Could Slow Down Growth
Despite the ambition, challenges remain.
Data centers need reliable electricity and large amounts of water.
In many parts of India, power supply is inconsistent and electricity costs are high. Water scarcity is also a growing concern.
Experts say that while data centers are now being treated as a strategic sector, issues like land approvals, power access, and state-level clearances could slow execution if not addressed properly.
More Than Just Data Centers
The budget also supports India’s wider technology and manufacturing goals
It expands incentives for electronics components, launches the next phase of the India Semiconductor Mission, strengthens rare-earth supply chains, and simplifies cross-border e-commerce rules.
Together, these steps show India’s plan to play a central role in AI, electronics manufacturing, and critical minerals.
India has made a bold bet on the future of AI infrastructure.
The policies are in place, and investments are flowing in. The real test now lies in turning these promises into reliable, large-scale execution.
