Feb 2: Indian Finance Minister Nirmala Sitharaman presented the Government. of India’s budget for the year 2026-27 in the Indian Parliament yesterday.
This budget has proposed to provide a tax holiday up to 2047 to any foreign company that provides services to any part of the world outside India by procuring data centre services in India. In addition, it is also proposed to provide a safe harbour of 15% to the resident entity providing data centre services to a related foreign company.
Sumant Parimal, Chief Analyst of 5 Jewels Research (5JR) at Innogress, has hailed this and other provisions under the Union Budget of Govt of India, and said that the tax holiday for the Indian Data Centres in budget Is a core sector moment for AI.
Giving his analyst outlook on the Indian Budget 2026 presented today in the Indian Parliament by FM Nirmala Sitharaman, Chief Analyst of 5 Jewel Research at Innogress Mr Sumant Parimal, has said
“During year 2022 pre-budget outlook I emphasised the need for according strategic sector status to AI (Artificial Intelligence) in line with core sectors like Electricity, Coal, Steel, Gas, Telecommunication, now I am happy to see that Govt. of India has understood this and has provisioned tax holidays till 2047 for Data Centers getting setup in India for the global markets. I see this tax holiday provisioned in this year budget for Indian data centres as equivalent to according a strategic and core sector status to AI, which gets hosted and accessed through these data centres, in line with my pre-budget outlook for the year 2022. This provision of Govt. of India to waive off tax on Data Centres for international markets is not only going to boost Big Tech’s & MNC’s Data Centres footprints in India but shall also boost the attractiveness of domestic firms’ data centers capacities in the pipeline for receiving foreign collaborations and investment interests” said Mr Sumant Parimal.
“Further, this tax holiday provision is going to expand data center capacity additions in India, which in turn is going to trigger semiconductors, electronics and other IT-engineering related components demands in India, and I am happy to see that this semiconductor-electronics demand trigger has been proactively addressed by Govt. Of India by announcing India Semiconductor Mission (ISM) 2.0 with a budgetary outlay of Rs. 1000 Cr and additional budgetary outlay of Rs. 40,000 Cr for Electronics Components Manufacturing Scheme (ECMS)in FY 2026-27” Mr Sumant Parimal said.
Mr Sumant Parimal also hailed other provisions of the budget which includes ‘Bharat-VISTAAR’-a multilingual AI tool to enhance farm productivity, improve farmer decision making and reduce risk through customized advisory support, and to support the Indian Institute of Creative Technologies, Mumbai in setting up AVGC Content Creator AI Labs in 15,000 secondary schools and 500 colleges in furtherance of India’s Orange economy and termed these provisions of the budget a right step towards achieving “AI For ALL” for which he is emphasizing since 2019.
Chief Analyst of 5 Jewels Research also hailed the Indian government plans to launch a Customs Integrated System (CIS) within two years to streamline all customs operations, as announced by Finance Minister Nirmala Sitharaman during the Union Budget 2026-27 and termed it as most pressing AI-Technology led business transformation in governance for ease of doing businesses by reducing bureaucracy, which is a big relief to Enterprises, SMEs and R&D labs which are importing critical equipment, devices and components from overseas under extreme time and budgetary constraints. Mr Sumant Parimal termed this ‘CIS’ initiative as a catalyst to integrate India-based deep tech. GCCs (Global Capability Centers) / research centres in the Global supply chain because customs clearances were a big bottleneck in the inbound and outbound supply chains at the Indian ports.
