India Offers Zero Taxes Through 2047 to Attract Global AI Workloads

India just made a bold play for the global AI crown. The government announced a tax holiday through 2047 for foreign cloud providers running AI workloads from Indian data centers — but only for services sold outside India. The goal: turn India into a magnet for the next wave of AI infrastructure investment.

What’s happening

Finance Minister Nirmala Sitharaman revealed the plan in India’s annual budget. Revenues from cloud services sold internationally and hosted in India will be effectively tax-free, while services sold domestically will still be taxed through local resellers. A 15% cost-plus safe harbour is also proposed for domestic data-center operators serving foreign entities.

This is a clear invitation to giants like Amazon, Google, and Microsoft, all of which are racing to expand AI-ready infrastructure worldwide. India offers a massive talent pool, growing cloud demand, and a strategic alternative to U.S., European, and other Asian data hubs.

Big investments already in motion

• Google: $15B for an AI hub + data centers in India (largest commitment yet)

• Microsoft: $17.5B by 2029 for AI/cloud expansion

• Amazon: $35B additional spend by 2030, bringing total investment to ~$75B

Domestic players are joining in: Reliance-backed Digital Connexion plans an $11B AI-focused data center campus in Andhra Pradesh, while Adani Group is investing $5B alongside Google.

The challenges

Scaling AI infrastructure isn’t easy. India faces power shortages, high electricity costs, and water scarcity — all critical for energy-hungry AI workloads. These constraints could slow projects or push operating costs up.

Why it matters

India is signaling that AI infrastructure is now a strategic sector, not just back-end tech. If executed well, the move could position the country as a major global AI compute hub — attracting both foreign investment and domestic innovation.

But as always, the devil is in the details: access to land, state-level clearances, and reliable energy will decide if this strategy actually delivers.