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Budget 2026: India’s Data Centre Boom | Key Takeaways
From streaming and cloud storage to AI tools and online payments, none of it works without robust infrastructure. Union Budget 2026 has put the spotlight on data centres; the backbone of our digital lives
Feb 01, 2026 · 1 min read
Nirmala Sitharaman has announced a tax holiday all the way till 2047 for foreign cloud companies that use Indian data centres to serve global users, with the caveat that Indian customers must still be served through local reseller entities. This move is significant because India generates nearly 20% of the world’s data, yet hosts only about 3% of global data centres — roughly 150 facilities compared to 11,000 worldwide.
The new incentives, along with a safe‑harbour rule to reduce tax disputes, aim to attract investment, boost onshore processing, and strengthen India’s data protection framework. Industry leaders see this as a huge opportunity, but challenges remain. Data centres consume massive amounts of power and water, raising sustainability concerns. The Economic Survey itself admits that AI and digital growth come with heavy environmental costs. With grid capacity and renewable energy already under strain, the question is whether India can scale its digital ambitions without hitting resource limits.
Budget 2026 sets the stage, but the next chapter will decide how sustainable this boom really is.
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