Data centre investments may surge to $200 billion as Budget offers tax holiday till 2047: Ashwini Vaishnaw

Minister for electronics and information technology Ashwini Vaishnaw

Investments in India's data centre sector could rise sharply to $200 billion following the Union Budget announcements, up from the $70 billion currently under execution, Union minister for electronics and IT Ashwini Vaishnaw said on February 1.

"Given the budget announcements, we expect investments in data centres to rise to $200 billion, up from the $70 billion of investments currently being executed. We are also seeing interest from AI server manufacturers to invest in India," Vaishnaw said at a press conference, after the presentation of the Union Budget.

A key driver of this surge, he said, is the tax holiday announced for data centres, including AI data centres, which will now be extended until 2047.

"For data centres including for AI data centres, the tax holiday will be a major boost for our country. With this announcement, it will help India in becoming the top 3 AI countries," Vaishnaw said.

Explaining the rationale behind the incentives, the minister linked the move to India's long-term technology ambitions.

"For the fifth industrial revolution, for the AI economy, we need to have the AI infrastructure within our country, accessible for our industry," he said, responding to a question on why such sops were necessary.

Vaishnaw added that India's demographic advantage made the case even stronger.

"We have the second-largest talent pool in the world. That talent gets rightly utilised if the infrastructure is readily available," he said.

Alongside data centres, he noted growing interest in AI servers and chips, and said discussions were underway with industry for the next phase of the mobile manufacturing PLI scheme.

The Budget, he said, reflects the government's push to align infrastructure, talent and industry investment with India’s emerging AI-led growth strategy.