India’s new Tax Bill proposes amendments to simplify norms for data centers and provide incentives for electronics manufacturers, aiming to ease regulatory hurdles for global cloud companies and offer long-term tax certainty to foreign suppliers of capital equipment. The changes are intended to make India a more attractive and predictable destination for global capital, manufacturing, and business, according to a source in the finance ministry.

A key proposal involves removing approval requirements for foreign cloud-service providers and Indian data center owners and operators to receive tax exemption until 2047. This move is designed to create a more conducive environment for the rapidly expanding data center sector, which already holds “infrastructure” status and is attracting billions of dollars in investment. People familiar with the matter indicated that stringent conditions, such as data centers needing to achieve approximately 750 megawatt (MW) capacity within a stipulated period or employing a specific number of people, are likely to be removed, according to a report by The Economic Times.

The proposed Bill will eliminate various approval requirements and, importantly, allow Indian data centers to operate on a leased basis rather than solely under direct ownership. Himanshu Parekh, tax partner at KPMG India, noted that current conditions apply at three levels: foreign companies to be notified, specified data centers operated by Indian entities to be notified, and data centers to be owned and operated by Indian companies. “This helps because you don’t need to approach the government,” Parekh said.

A source in the finance ministry added that this reform is expected to foster a much larger and more flexible ecosystem of Indian data centers serving global cloud players, helping India build large “AI data cities” and attract substantial investment.

The Information-technology industry body Nasscom welcomed the proposal, highlighting the shift from an approval-based process to a condition-based regime as a positive step. Nasscom stated that the revised proposal would benefit foreign cloud service providers and other foreign companies with workloads in India, including groups with global capability centres (GCC) operations, whose models may involve group entities, overseas resellers, Indian reseller arrangements, and cross-border customer servicing.

Removing the requirement to notify foreign companies reduces the risk of tax certainty depending on the entity named in an approval, with Nasscom asserting that meeting statutory conditions is a better test. It also aids Indian data center companies by reducing the approval burden on facilities and making Indian-operated infrastructure more accessible for global customers.

Sunil Gupta, cofounder, chief executive officer (CEO) and managing director of Yotta Data Services, said the government’s efforts are positioning India as an attractive global hub for cloud and artificial intelligence (AI) infrastructure by streamlining notification requirements. Gupta believes this could significantly boost global demand for India-based sovereign cloud, graphics processing unit (GPU), and AI infrastructure, supporting India’s emergence as a major global AI compute destination.

For electronics manufacturing, experts noted that the Bill improves ease of doing business, strengthens supply-chain resilience, and encourages global technology and component companies to establish a deeper, long-term presence in the country. Ashok Chandak, president of the India Electronics and Semiconductor Association, highlighted that including mobile phones, laptops, personal computers, tablets, servers, and their key components under these measures will provide greater certainty and strengthen India’s contract and brand manufacturing ecosystem.