Tax holiday for data centres: A multi-decade investment play for power and real estate stocks?

The Union Budget 2026 has likely laid the foundation for what market participants see as a multi-decade structural opportunity in India’s data centre ecosystem. By extending the tax holiday on data centres up to 2047 for foreign companies using India-based facilities to serve global customers, the government has signalled long-term policy intent rather than a short-term incentive.

At the heart of the proposal is a clear push to position India as a global data processing hub, not merely a consumption market for cloud and digital services. Under the Budget proposals, foreign companies that use Indian data centres to serve customers outside India will enjoy tax exemptions, while revenue earned from Indian customers under a reseller model will remain taxable domestically.