Foreign cloud behemoths take note: India’s Finance Ministry has outlined four mandatory hurdles to claim the freshly announced tax holiday for data center collaborations. Announced in the recent budget, this 20-year waiver—from 2026-27 to 2046-47—targets global players offering cloud services that tap Indian infrastructure.
Officials stress the scheme’s precision: only notified foreign companies using certified local partners qualify for income protection on worldwide earnings.
Breaking it down: (1) The foreign entity must receive formal notification. (2) Data center services come solely from Indian firms. (3) Facilities bear MeitY’s seal of approval. (4) Indian end-users access services through domestic resellers.
By design, this insulates providers from surprise Indian tax claims on global profits, fostering trust in local partnerships.
Standard taxation applies to Indian-sourced income, from data center charges to reseller commissions. Affiliated setups enjoy a 15% safe harbor, ensuring equity between standalone and group-owned centers.
The equal-footing approach empowers Indian data firms to compete globally, free from tax risk shadows. Clients like Microsoft Azure or Oracle can confidently scale operations here.
This strategic incentive is set to ignite a data center boom, complete with green energy mandates and edge computing hubs. It underscores India’s pivot toward self-reliant digital backbone, potentially creating lakhs of jobs and billions in FDI.