India offers zero taxes through 2047 to lure global AI workloads

India has introduced a significant tax incentive to attract global AI workloads by offering foreign cloud providers zero taxes through 2047 on revenues from services sold outside India, provided these services are run from Indian data centers. Announced by Finance Minister Nirmala Sitharaman in the annual budget, this tax holiday aims to position India as a competitive hub for AI computing investment amid a global surge in demand for cloud infrastructure. The budget also includes a 15% cost-plus safe harbour tax provision for Indian data-center operators serving related foreign entities. However, sales to Indian customers will be taxed domestically through local resellers. This move aligns with major investments by global tech giants such as Google, Microsoft, and Amazon, who have collectively pledged tens of billions of dollars to expand AI and cloud infrastructure in India. Domestic players like Digital Connexion and Adani Group are also investing heavily in large-scale AI-focused data center projects, signaling strong interest from both international and local investors. Despite these positive developments, challenges remain,