The Union Budget 2026-27 offers long-term tax incentives to attract foreign cloud companies to India. Firms providing global cloud services from Indian data centres will get a tax holiday until 2047, provided they serve Indian customers through a local reseller. A 15% safe harbour on costs for related entities is also introduced to encourage investment in local infrastructure and capacity.
All IT services will now follow a uniform 15.5% safe harbour margin. The eligibility threshold for IT services has been raised to ₹2,000 crore, and approvals will be automated to simplify compliance. These reforms aim to position India as a global hub for digital services while supporting IT, AI, and data infrastructure growth.
On manufacturing, India Semiconductor Mission 2.0 will receive ₹40,000 crore to develop equipment, materials, and full-stack intellectual property, alongside industry-led research and training centres to build a skilled workforce.
These measures form part of the government’s broader plan to strengthen India’s digital ecosystem, expand cloud and data centre infrastructure, and enhance the country’s competitiveness in global technology markets.
