India's Zero-Tax AI Policy Through 2047: What It Means for GPU Infrastructure

India's Union Budget 2026-27 introduced something unprecedented: a complete tax holiday through 2047 for foreign companies providing cloud services globally from Indian data centers, plus a 15% safe harbour rate for domestic operators.

This isn't a typical two-year incentive. It's a 21-year commitment that fundamentally changes the economics of running AI workloads in India.

What the policy includes

The headline is the tax exemption, but the full package is broader:

• Zero taxes through 2047 for qualifying foreign cloud and AI operations
• 15% safe harbour for domestic data center operators
• Infrastructure status for data centers, unlocking cheaper financing
• Streamlined approvals for land and power allocation

At the AI Impact Summit in February 2026, India's IT minister explicitly offered long-term tax holidays and subsidies for sustainable data center builds, while acknowledging power and water as the key constraints the government is working to address.

Why this matters for AI teams

For organizations evaluating where to run large-scale AI workloads, total cost of ownership is the deciding factor. India's policy removes one of the biggest line items — taxes — while the country's fundamentals already offer advantages on the others:

• Electricity costs 40-60% lower than U.S. data center markets
• Skilled engineering talent for operations and support
• Massive renewable energy build-out — India added 44.5 GW of renewables in 2025 alone, reaching 254 GW total

The math is straightforward: lower taxes, lower power costs, and lower labor costs compound into a meaningfully different TCO over multi-year training and inference commitments.

The investment wave

The policy is already driving results. India is targeting over $200 billion in AI infrastructure investment by 2028:

• Google: $15 billion for its first Indian AI hub
• Microsoft: $17.5 billion in data center investment
• Amazon: Up to $35 billion by 2030
• Reliance Industries: $110 billion over seven years for AI data centers and edge compute
• Adani Group: $100 billion to expand from 2 GW to 5 GW of data center capacity

India's data center power capacity is projected to surpass 2 GW by late 2026 and could exceed 8 GW by 2030.

Our perspective

We built NovaCore in Hyderabad because we believed India would become a first-class AI infrastructure market. This policy validates that thesis at a national level.

For our customers, the zero-tax framework means we can pass through structural cost advantages that simply aren't available in other markets. For AI teams running large, sustained workloads — the kind measured in months and years, not hours — India is becoming the most cost-effective destination for serious compute.

Talk to our team about running your workloads on NovaCore's Hyderabad infrastructure.