Tax sops for data centres, nuclear energy to help India attract $200B investments

Union minister for electronics and IT Ashwini Vaishnaw said that the sops in the 2026 budget will help India become a global AI hub and enable India’s tech industry to serve AI services to the rest of the world. Vaishnaw was talking to the media about the budget today. 

In her budget speech, Finance Minister Nirmala Sitharaman spoke about a tax holiday for  data centres and cloud service providers till 2047. Sitharaman said that the government will waive off basic customs duty on import of goods required for nuclear power projects till 2035.   

“Its very important that we have nuclear power. This will help break the new energy (challenge) needed for large investment in AI. I think we are expecting $200B worth of investment in data centres,” Vaishnaw said, explaining the impact of sops on AI infrastructure.

The AI server manufacturers and companies involved in the assembly and packaging for AI chips have also shown interest in setting up facilities in India, Vaishnaw said, while explaining the rationale behind the tax sops to data centre and cloud service providers, 

“Once you have AI data centres, then the manufacturing ecosystem for chips, for AI data servers, all the components which go in setting up the AI data centres also gets a multiplier impact.”

AI infrastructure is the most important component of the fifth industrial revolution, for the AI economy. Vaishnaw said. “We need to have AI infrastructure within our country, accessible to our IT industry so they can provide services to the entire world.’

Under India AI Mission, the AI architecture involves five five layers including application, model, chips, infrastructure, and energy. 

Vaishnaw said that Indian startups are already working on innovation models for reducing energy consumption by 35% in data centres. There is another startup which is working on building a micro nuclear power generator which can be placed on a rack. He didn’t name these startups.