Artificial Intelligence

Tax sops for data centres are a good start, but bigger tests await

Thimmaya Poojary

August 07, 2026 | 5 Min Read

Tax sops for data centres are a good start, but bigger tests await

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August 07, 2026 | 5 Min Read

The Taxation and Other Laws (Amendment) Bill, 2026 removes a key tax uncertainty for foreign companies using India-based data centres. But addressing constraints around power, water and land will be equally important if India is to emerge as a global AI infrastructure hub.

According to the Government’s latest projection, India’s power demand from artificial intelligence data centres will rise to 26.3 GW by 2031-32. This is almost a doubling of the Government’s own estimate made earlier this year.

The country’s current data centre capacity is just around 1.5 GW. For capacity to catch up with demand, considerable investment has to flow in.

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