Mumbai, Feb 14 (NationPress) The tax exemption for international cloud service providers is designed to "ensure investment stability, establish high-value digital infrastructure in the nation, and enhance India's position in global digital value chains," as stated by the government on Saturday.

The government has introduced a tax exemption valid until 2047 in the Budget 2026–27 for qualifying foreign cloud service providers that operate through data centers located in India. This means that the income of such entities will be free from Indian taxes from the fiscal year 2026–27 through 2046–47, pending certain conditions.

According to an official announcement, "The proposed tax framework, lasting until 2047, offers long-term policy clarity for these capital-intensive investments. The tax exemption for foreign cloud providers aligns with other significant initiatives introduced in Budget 2026–27, such as the India Semiconductor Mission 2.0 and increased funding for the Electronics Components Manufacturing Scheme."

Collectively, these efforts tackle various aspects of the technology value chain, from semiconductor design and materials to electronics components, IT services, and digital infrastructure.

Currently, investments nearing $70 billion are in progress in India's data center sector, with an additional $90 billion in projects announced, underscoring the extensive growth potential, the statement noted.

Industry analyses suggest that India's cloud data center capacity has reached approximately 1,280 MW and is expected to expand four to five times by 2030.

In the face of escalating global competition for AI infrastructure, this policy positions India as a credible and long-term destination for cloud and data center investments, the report adds.

Estimates from the United Nations Conference on Trade and Development (UNCTAD) indicate that data centers will represent over one fifth of global greenfield project values by 2025, with announced investments surpassing $270 billion. The rapid rise in demand for AI computing and data-heavy digital services is intensifying the international race to secure such infrastructure.

The Budget also introduced the India Semiconductor Mission 2.0, with a budgetary provision of Rs 1,000 crore, aimed at focusing on the design and manufacturing of semiconductor equipment in India, as well as components essential for semiconductor production. This initiative has garnered 149 applications, exceeding initial expectations and showcasing robust industry interest.

Additionally, the Budget proposed a standardized safe harbor margin of 15.5 percent for IT services, one of India’s crucial export sectors, with exports exceeding $220 billion.

aar/pk