Key Takeaways
- India is considering a 21-year corporate tax holiday for AI data centres until 2047.
- The proposal targets global tech giants like Google and Microsoft to attract over $50 billion in investment.
- It is part of a broader “AI Infrastructure Mission” with fast-tracked clearances and green energy corridors.
The Indian government is planning a landmark 21-year tax holiday for artificial intelligence data centres in the 2026 Union Budget. This move aims to make India the world’s most attractive destination for AI infrastructure investment, directly targeting major tech firms.
The proposal, under serious discussion in the finance ministry, would exempt qualifying AI data centres from corporate income tax until 2047—India’s 100th year of independence. The goal is to catalyse an investment surge exceeding $50 billion within five years.
Targeting Global Tech Giants
The policy is designed to attract capital-intensive AI computing projects from companies like Google, Microsoft, Amazon, and Meta. These firms are in a global race to build vast computational capacity for next-generation AI models.
“The scale of investment required for AI data centres is of a different magnitude. We are looking at creating a policy framework that is not just competitive but decisively superior to any other jurisdiction,” a senior government official told India Today.
Cornerstone of AI Infrastructure Mission
The tax holiday is the centrepiece of a broader “AI Infrastructure Mission.” The plan includes:
- Fast-tracked clearances for land and power.
- Dedicated green energy corridors.
- Streamlined import procedures for critical hardware.
Industry Reaction and Global Context
Industry leaders have reacted with cautious optimism. A senior cloud services executive stated the long-term incentive provides the predictability global boardrooms need for mega-investments, calling it a potential “game-changer.”
While countries like Singapore and Ireland use tax incentives for data centres, a 21-year exemption focused solely on AI infrastructure would be unprecedented in duration and strategic focus.
Challenges and Next Steps
Key design aspects remain under debate, including:
- Minimum investment thresholds.
- Energy efficiency standards for sustainability.
- Mechanisms to ensure high-skilled job creation in India.
The Union Cabinet will make the final decision before the budget presentation in February 2026. If implemented, this policy could significantly shift global AI capital flows, helping India capture a larger share of the booming AI economy and establish itself as a critical node in the world’s digital future.
