India's Union Budget 2026-27 has introduced targeted tax incentives for the data centre industry, including a tax holiday until 2047 and a safe harbor regime with a 15% margin for domestic data centre service providers. These reforms are expected to significantly influence how foreign companies procure data centre services in India and how domestic data centre service providers structure their ownership and contractual arrangements. This note explores the impact of these tax reforms on existing data centre business models, contracting structures, and investment considerations for both domestic and foreign stakeholders.
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This insight has been authored by Sumit Bansal, Aakanksha Joshi, Srikari Kancherla and Oshika Nayak from S&R Associates. They can be reached at [email protected], [email protected], [email protected] and [email protected], respectively, for any questions. This insight is intended only as a general discussion of issues and is not intended for any solicitation of work. It should not be regarded as legal advice and no legal or business decision should be based on its content.