Domestic and foreign investors to get equal tax benefits on data centres: Union minister Ashwini Vaishnaw

Domestic and foreign companies will be treated on a par as far as tax benefits on data centres are concerned, Union IT and electronics minister Ashwini Vaishnaw said on Saturday citing a clarification from the finance ministry after the budget which spells a major relief to the domestic players.

“After the budget, we have clarified very clearly from the finance ministry that both the domestic and foreign investors will be treated at par as far as the tax benefits on the data centres are concerned," Vaishnaw told media persons.

ET had reported on February 3 that India’s domestic data centre players were planning to petition the government against the decision to provide a 20-year tax holiday to global cloud providers which had provided an advantage to foreign firms such as Microsoft, AWS and Google.


The minister said the government had taken decisive steps to accelerate the growth of data centres in India, calling them the backbone of the country’s transition to artificial intelligence (AI)-based services. He said the clarification on equal tax treatment for domestic and foreign investors was issued following questions from the IT industry, and pointed to the government’s intent to make India a global hub for AI infrastructure.

Vaishnaw said the IT and software industry is undergoing a fundamental shift from traditional service models to AI-driven services, a change he described as part of what many call the “fifth industrial revolution”. In this new architecture, data centres form a critical layer, enabling India to offer AI-based services to the world. “If we have data centres, then we can provide AI services to the world,” he said, adding that rapid expansion of such infrastructure is essential for the country’s competitiveness.

Vaishnaw also inaugurated a new aerospace- and defence-focused electronics manufacturing facility of Zetwerk, a contract manufacturing and electronics platform. It marks an expansion of high-precision manufacturing capabilities, as India pushes for greater self-reliance in strategic sectors.

The 100,000 sq ft facility, located near Devanahalli, is Zetwerk’s second unit in Bengaluru and is designed to cater to aerospace, defence and automotive electronics, including mission-critical avionics and electronic warfare systems. The facility is operational and is expected to go into full-scale production by March-April, Zetwerk co-founder Rahul Sharma told ET.