Budget 2026: Developers see major data centre push as FM Sitharaman announces data centre tax holiday

Notably, sectors such as real estate and automobiles—both of which have a direct bearing on household finances—did not feature prominently in this year’s Budget

Real estate developers in India that have significantly ventured into the data centre business stand to benefit as finance minister Nirmala Sitharaman announced a tax holiday till 2047 for overseas firms providing cloud services through data centres, provided that the services are provided to Indian customers.

"The tax holiday for cloud services and data centre operations announced in the Union Budget 2026 reflects a strong commitment to attracting long-term capital and enhancing India’s competitiveness in the digital economy. These measures will improve the viability of large-scale data centre investments, enable faster capacity addition, and strengthen the broader technology ecosystem," said Amit Sarin, managing director, Anant Raj Ltd.

Data centres, which require large quantums of investments, land, electricity, and water supply, have become critical to enterprises and hyperscalers due to significant computing needs in the wake of emergence of artificial intelligence tools, and pressure from governments for sovereignty of data. According to sector experts, around $10 million in investment is required to set up 1 MW (megawatt) in data centre capacity, with a tax holiday being a significant leg-up for data centre players.

"...Measures that support the digital economy — including safe-harbour clarity for IT services and a long-tenor tax holiday till 2047 for foreign cloud service providers setting up data centres in India — improve policy certainty, attract long-duration global capital, and create durable tailwinds for REITs through stronger occupier demand and deeper liquidity," said Ramesh Nair, MD and CEO of Mindspace Business Parks REIT.

Property consultancy JLL India's chief economist and head of research Samantak Das added that the tax holiday for foreign data centre service providers is set to make India a global hub for data centres.

Shaishav Dharia, director of Lodha Green Infrastructure, the data centre arm of Lodha Developers, echoed Das.

"The tax holiday extended till 2047 for global cloud players using Indian data centres, together with safe-harbour clarity, sends an unambiguous signal to global investors that India is open, competitive, and stable for long-term digital infrastructure capital. This policy framework, combined with India’s scale, deep talent pool, and steadily improving power and connectivity infrastructure, will accelerate hyperscaler investments, create high-quality jobs, and firmly place India on the global data centre map," said Dharia.

Multiple Indian developers and infrastructure players build data centres for data hyperscalers such as Amazon Web Services, Google Cloud, Microsoft Azure, and others, and developers also own and operate data centres which are used by data hyperscalers and enterprises.

Some of these developers include RMZ, Larsen & Toubro, Lodha Developers, Anant Raj Ltd, Hiranandani Group, and others, while others are planning significant investments, such Mindspace Business Parks REIT, backed by K Raheja Corp. Large fund-backed firms have also entered the data centre business, such as Blackstone's Lumina Cloudinfra, and Temasek-backed CapitaLand.

"Budget 2026...it introduced a strategic long-term tax holiday for foreign cloud firms using Indian data centres — a policy designed to draw global digital infrastructure investments till 2047. From an architectural and urban planning standpoint, this represents a meaningful shift- designing resilient, energy-efficient, high-availability facilities will become a defining element of the built environment in cities like Mumbai," said Hardik Pandit, director, APICES Studio, a firm that designs data centres.