India's Data Centre Investments to Reach $70 Billion

Key Highlights:

• $70 billion worth of data centre investments are underway in India.
• Tax incentives under the finance bill aim to ensure that these investments translate into infrastructure and jobs.
• Cloud capacity is projected to grow 4 to 10 times by 2030.

Data Centre Tax-Holiday Framework

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The finance minister, Nirmala Sitharaman, has introduced a data centre tax-holiday framework to ensure that global cloud investments are anchored in India. The framework provides a tax holiday until 2047 for foreign cloud providers that utilise data centre services located in India. This means that physical infrastructure must be built and operated domestically, guaranteeing that construction, operation, and maintenance activities, as well as jobs, largely stay local.

Domestic Ecosystem

The policy also mandates that all services to Indian users be routed through Indian reseller entities, aimed at building a broader domestic ecosystem that captures value and employment locally.

Jobs and Infrastructure Demand

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The expansion of cloud capacity will drive demand across construction, cooling infrastructure, power management, cyber security, and network operations, generating a lot of direct and indirect jobs in India.

Manufacturing and Consumption Indicators

The government's approach of linking large-scale digital infrastructure investments with localisation requirements has supported exports of data services. Manufacturing and consumption indicators have picked up following the rationalisation of goods and services tax (GST) rates. Cement production has increased by 9 or 9.3 percent, and retail passenger vehicle sales rose 26.1 percent, the highest ever for any February since the GST was introduced.

Cesses and Surcharges

The minister has rejected concerns over the use of cesses and surcharges, stating that cumulative utilisation has exceeded collections. Rs 7.03 lakh crore was collected between 2014-15 and 2026-27, while total utilisation stands at about Rs 7.77 lakh crore, nearly Rs 74,000 crore higher.