India has announced a 20-year tax exemption for hyperscalers that use data centers in the country to service global clients, in a move that could shift artificial intelligence-driven businesses to the South Asian country.
According to experts, cost of data center infrastructure is already low in India and coupled with the tax holiday it will make using data centers in India for global delivery more attractive for hyperscalers, compared to competing hubs including Singapore, UAE and Ireland.
Hyperscalers refer to cloud computing giants such as Amazon Web Services, Microsoft Azure and Google Cloud that are investing heavily in data center infrastructure that power AI models.
“This proposal will significantly increase the hyperscaler demand and major foreign firms will now find India a significantly cheaper base for global workloads,” Riaz Thingna, partner, tax, regulatory and finance consulting at Grant Thornton Bharat, told CNBC.
This move positions India not just as a “consumption market” for data center demand but as a “global cloud computing and AI computing hub,” Thingna said, adding that currently hyperscalers face “corporate income tax exposure” if they have “significant economic presence” in India.
