India’s Union Budget 2026–27 included a proposal that will be closely watched by global cloud service providers.
In short, it offers a tax holiday through 2047 for foreign companies delivering cloud services to customers globally using data centre services from India.
The proposal includes two important conditions: services to Indian customers must be delivered through an Indian reseller entity, and a 15 percent safe harbour margin on cost would apply where the Indian data centre service provider is a related entity.
For international operators, the significance is not only the headline incentive, it is the signal of long-term intent, and the potential reduction in uncertainty that often complicates cross-border operating models.
The reseller requirement draws a clear line between global service delivery from India and domestic service provision. The safe harbour provision matters because it provides a clearer framework for related-party arrangements, which can remove friction in internal pricing structures and long-range financial planning.
The proposal comes at a time when market build-out is already progressing, which strengthens its relevance for global capacity planning.
Linesight’s most recent Construction Market Insights for APAC and GCC notes that India leads the region in data centre development, with a pipeline valued at US$85.2bn, alongside the second-largest semiconductor construction pipeline in APAC by value at US$88bn. For global providers weighing where to place future cloud and AI workloads, those pipelines point to a maturing ecosystem, not an early-stage market.
For global providers weighing where to place future cloud and AI workloads, those pipelines point to a maturing ecosystem, not an early-stage market.
For international cloud service providers and hyperscalers, the implications are clear. The policy is likely to make India more competitive as a location to serve global demand, improve long-term investment certainty, and accelerate capacity planning decisions. With the measure formally introduced in the Union Budget 2026–27 and expected to take effect from 1 April, subject to final rules and guidance, it could materially influence how and when future capacity is deployed.
That is particularly relevant at a time when global digital infrastructure strategies are increasingly shaped by the ability to commit capital with confidence, and to deliver at speed in a constrained market.
Linesight supports global cloud service providers and hyperscalers delivering data centre programmes in India, with teams in Mumbai and Bengaluru providing cost and commercial management, project management, supply chain support, and scheduling and QRA services.
For international organisations entering the market, Linesight can act as an independent project consultant, supporting the development lifecycle from due diligence through to commissioning.
