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(Bloomberg) — India will offer a two-decade tax holiday to overseas firms that provide global data center services from the country, stepping up efforts to woo investors in its fast-growing digital infrastructure sector.
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Foreign companies operating data centers in India will be exempt from taxes on overseas services through 2047, Finance Minister Nirmala Sitharaman announced in the federal budget Sunday. The break applies only to services delivered out of the South Asian country. Sales to Indian users through a local unit will be taxed, she said.
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India has already rolled out incentives such as infrastructure status for data centers and eased land-use rules in several states. The latest push underscores New Delhi’s ambition to position the world’s most-populous nation as a global hub for data storage and cloud infrastructure as it own digital economy and energy capacity expands. Demand for data centers has surged globally as firms race to support cloud computing and artificial intelligence, prompting governments across the world to compete for investors.
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Amazon.com Inc. and Microsoft Corp. have already intensified their India push with a combined $52 billion in fresh investment, underscoring the country’s rising status as a key growth market for artificial intelligence, cloud services and online retail.
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The Indian government also plans to introduce a “safe harbor” margin of 15% for resident entities that provide data center services to related foreign companies. The provision will help simplify transfer-pricing rules for domestic units that support global cloud services delivered to markets outside of India.
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