India just made one of its boldest plays yet in the global AI infrastructure race. Finance Minister Nirmala Sitharaman announced a tax holiday running through 2047 for foreign cloud providers that run international workloads from Indian data centers - effectively zero taxes on revenues from services sold outside the country. The move comes as Amazon, Google, and Microsoft pour tens of billions into expanding compute capacity across India, even as power shortages and water scarcity threaten to constrain the very expansion New Delhi is trying to accelerate.
India just threw down a 23-year tax holiday to win the global AI infrastructure sweepstakes. On Sunday, Finance Minister Nirmala Sitharaman unveiled the proposal in the country's annual budget - foreign cloud providers get zero taxes through 2047 on revenues from services sold outside India, as long as those workloads run from Indian data centers. It's a massive bet that tax incentives can overcome infrastructure headwinds and position India as the go-to destination for the next wave of AI computing investment.
The timing isn't accidental. Amazon, Google, and Microsoft are in an arms race to add data center capacity worldwide, and India has emerged as one of the most attractive expansion markets. The country offers a deep pool of engineering talent, surging demand for cloud services, and - at least in theory - a compelling alternative to saturated markets in the U.S., Europe, and parts of Asia.
Google fired the opening shot in October, committing $15 billion to build an AI hub and expand data center infrastructure across India - its largest commitment in the country to date, following a $10 billion pledge back in 2020. Microsoft countered in December with plans to invest $17.5 billion by 2029, funding new data centers, infrastructure, and training programs to expand its AI and cloud footprint. Then Amazon raised the stakes, saying it would invest an additional $35 billion in India by 2030, taking its total planned spending to about $75 billion as it scales both retail and cloud operations.
