Zero taxes attract global AI cloud investment in India

The government offers zero-tax incentives to attract AI infrastructure in India.
India aims to become a global hub for AI infrastructure by providing tax-free incentives, while facing power, water, and regulatory hurdles for data centre expansion.

India has unveiled a plan to offer foreign cloud providers zero taxes on revenues from services sold abroad if workloads are run from Indian data centres until 2047. The move aims to attract AI investment despite power and water shortages.

Major US tech companies, including Google, Microsoft and Amazon, have pledged billions of dollars to expand AI-focused data centres in India. Domestic operators are also increasing capacity, with large projects announced in Andhra Pradesh and other states.

The government has boosted incentives for electronics and semiconductor manufacturing, critical minerals, and cross-border e-commerce. These measures aim to integrate India more deeply into global technology supply chains.

Analysts warn that execution risks remain, including energy shortages, land access and regulatory hurdles. Observers say the tax holiday and incentives reflect a strategic bet on establishing India as a global hub for AI and cloud computing.

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