Budget 2026-27 boosts Indian IT with 20-year cloud tax holiday
Budget 2026-27 boosts Indian IT with 20-year cloud tax holiday
Budget 2026-27 pledges tax breaks for foreign cloud providers in India, doubles ECMS to ₹40,000 crore, and rolls out ISM 2.0 to accelerate electronics manufacturing.
In a budget aimed squarely at tech growth, the government unveiled a slate of measures to bolster India's IT and electronics sectors. The most talked-about move is a 20-year tax holiday for foreign cloud service providers operating from India, a strategic push to attract global data and cloud players to establish a stronger footprint in Indian data centres. To qualify for the tax holiday, companies must deliver services to Indian customers through an Indian reseller entity, outlining a clear localised pathway for foreign firms.
The Electronics Components Manufacturing Scheme (ECMS) received a significant boost, with outlays doubling to ₹40,000 crore. This expansion signals a robust push to strengthen domestic manufacturing capabilities and reduce reliance on imported components, a key goal for the broader Make in India agenda.
In a bid to deepen the country’s semiconductor ecosystem, Finance Minister Nirmala Sitharaman announced India Semiconductor Mission 2.0 (ISM 2.0). The initiative aims to attract investment, boost local chip production, and foster a more resilient electronics supply chain. Alongside these steps, the budget mentions advancing rare earth corridors as part of efforts to secure critical materials and bolster the tech sector’s long-term competitiveness.
Analysts say the package could attract more investment and create jobs in both IT services and electronics manufacturing, while observers will be watching implementation timelines and how the reseller mechanism for cloud services will operate in practice. If executed well, these measures could position India as a more attractive hub for digital services and semiconductor development in the coming years.
