India offering zero taxes through 2047 to lure global AI workloads

As the global race to build AI infrastructure accelerates, India has offered foreign cloud providers zero taxes through 2047 on services sold outside the country if they run those workloads from Indian data centers.

On Sunday, India’s finance minister Nirmala Sitharaman announced the proposal in the country’s annual budget, offering a tax holiday on revenues from cloud services sold outside India if those services are run from data centers in the country. Sales to Indian customers would have to be routed through locally incorporated resellers and taxed domestically.

The announcement comes as India emerges as an increasingly attractive location for new investment and U.S. cloud giants including Amazon, Google, and Microsoft race to add data-center capacity worldwide to support the surge in artificial-intelligence workloads. The country offers a large pool of engineering talent and growing demand for cloud services, and has positioned itself as a key alternative to the U.S., Europe, and parts of Asia for expanding compute infrastructure.

In October, Google said it would invest $15 billion to build an AI hub and expand data-center infrastructure in India, its largest commitment in the country to date, following a $10 billion commitment in 2020.

Microsoft followed suit in December with plans to invest $17.5 billion by 2029 to expand its AI and cloud footprint, funding new data centers, infrastructure, and training programs. Amazon has also stepped up its spending in December, saying it would invest an additional $35 billion in India by 2030, taking its total planned commitment to about $75 billion as it expands its retail and cloud operations.