Overview
- Foreign AI and cloud providers using India‑based data centers to serve customers outside the country will be exempt from Indian tax until March 31, 2047.
- The exemption covers services delivered from facilities owned and operated by local developers, with the policy intended to boost long‑term data‑center investment.
- Revenue from Indian users must be routed through an Indian reseller entity for domestic taxation, and a 15% safe‑harbour margin applies to related‑party data‑center services.
- Experts say the move eliminates a key tax friction for hyperscalers and could accelerate capacity growth, with India’s market expected to more than double from roughly 1.2 GW in five years.
- Domestic cloud and data‑center firms caution that the incentives may favor foreign platforms, while analysts note power, cooling and talent constraints that could limit execution.