Our Bureau
New Delhi
The Union government has announced a 21‑year tax holiday for artificial intelligence (AI) and data‑centre projects in India, as part of the Union Budget 2026. The move is aimed at turning the country into a global hub for AI infrastructure and attracting large‑scale private investment in data centres.
Under the new scheme, companies setting up AI‑related data‑centre projects will be exempt from income tax for 21 years. The benefit will apply to projects that meet specified technical and investment thresholds, including minimum capital outlay and energy‑efficiency standards. The government said the incentive will cover both greenfield and expansion projects in designated regions.
Officials said India’s ambition is to become a leading player in the global AI value chain, and data centres are seen as the backbone of that plan. They expect the tax holiday to encourage domestic and foreign firms to build high‑capacity data‑centre campuses in India, creating jobs and boosting local supply chains. The scheme is also expected to support cloud‑computing services, AI training facilities, and large‑scale digital infrastructure.
Industry groups welcomed the announcement, calling it a strong signal of policy support for the tech sector. They noted that lower tax costs over a long period will make India more competitive against other data‑centre hubs in Asia. At the same time, some experts have asked for clearer guidelines on eligibility, environmental norms, and how the policy will be monitored to avoid misuse.