Data Centre tax holiday to benefit Indian players, GPU infra big way: Yotta CEO Gupta

Sunil Gupta, CEO of Yotta

• Tax holiday for foreign cloud firms using Indian data centers extended to 2047
• Shift likely to increase GPU infrastructure outsourcing from India to foreign firms
• Indian resellers like Yotta, Adani, Airtel Nxtra to benefit from new tax regime

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The 20-year tax holiday for foreign cloud providers will trigger a massive surge in GPU infrastructure outsourcing to Indian players, according to Sunil Gupta, Co-founder and CEO of Yotta Data Services.

The Data Centre man of India told Moneycontrol, “These developments shall grow the data centre and GPU infrastructure capacity outsourcing from Indian players by these foreign players big way.”

Yotta, a Hiranandani Group company, has emerged as a central pillar of India’s AI infrastructure and the IndiaAI Mission, providing approximately 50 percent of the advanced GPUs earmarked under the government's initiatives.

Finance Minister Nirmala Sitharaman, on February 1, proposed the landmark tax holiday until 2047 for foreign companies providing cloud services using data centre infrastructure located in India.

This move comes as global technology companies look to set up data centres in the country to cater to the growing adoption of AI products and services by Indian consumers.

The catch is that such companies must route services for Indian customers through an Indian reseller entity to qualify, ensuring that India not only becomes a global hub for cloud infrastructure but also secures meaningful participation of domestic intermediaries in the value chain.

“I propose to provide a tax holiday till 2047 to any foreign company that provides cloud services to customers globally by using data centre services,” Sitharaman said in her budget speech.

Several Indian players, such as Yotta, E2E, Adani Group, Airtel’s Nxtra, CtrlS, NxtGen and Reliance Jio, who are key resellers of the largest tech titans in India, are likely to catalyse the mission.

Additionally, Gupta also pointed out that the use case of foreign cloud providers serving global demand from India shall increase significantly. “Safe harbour tax of 15% in case their Indian entity serves their foreign entity shall give lots of predictability and confidence to the foreign operators regarding the tax regime.”

Meanwhile, FM Sitharaman announced that all categories of IT services, including software development, IT-enabled services, knowledge process outsourcing and related contract R&D, have been brought under a single safe harbour category with a uniform margin of around 15.5 percent.

This is a significant reduction from the previous range of 17-24 percent margin, depending on the category of services.

“Also, since foreign players shall have to use Indian units to serve Indian customers and pay regular tax on those profits, these budget provisions do not impact or put Indian sovereign cloud operators at any disadvantage,” Gupta added.