India unveils long-term tax holiday to attract international data-center investment

India has introduced a sweeping fiscal incentive aimed at drawing large-scale data-center projects and the cloud operators that build them. The centerpiece is a two-decade tax holiday intended to lower the lifetime cost of investment and operation, giving developers a clearer long-term return profile. Policymakers are framing the measure as a way to accelerate campus-scale builds, boost local supply chains and anchor global providers’ regional hubs. The timing reflects rising competition among Asian and Middle Eastern jurisdictions that have been courting hyperscale infrastructure with bespoke incentives. For multinational operators the headline duration matters, but finer points — eligibility criteria, interaction with existing duties and local levies, and the permit timeline — will determine whether projects proceed at scale. Domestic firms and vendors could gain from increased demand, yet they may also face pressure on margins as international entrants seek favorable terms. From a macro angle, the plan could stimulate capital expenditure, create construction and operations jobs, and pull forward related investments in power and connectivity. However, fiscal trade-offs exist: extended exemptions may compress near-term tax receipts and require careful targeting to avoid windfalls for projects that would have been built anyway. Implementation risks include administrative complexity and potential legal challenges around state-level taxes and land-use rules. The incentive should be judged not only by duration but by the clarity of application and speed of approvals — factors that historically influence where hyperscalers place multi-year bets. If executed cleanly, India can convert policy generosity into tangible capacity and supply-chain depth; if not, the gesture risks being an expensive promise with limited new capital. In short, the announcement is a credible signal of intent but not a guarantee of immediate megaproject announcements; the follow-through will decide winners and losers in the regional data-center race.