India Offers 20-Year Tax Holiday to Attract Global Cloud Providers

India has unveiled an ambitious plan to transform itself into a global cloud computing powerhouse by offering a 20-year tax holiday to foreign companies that provide cloud services to customers outside India while using Indian data centers.

India's Bold Tax Incentive Strategy

The announcement came as part of India's annual budget presentation by Finance Minister Nirmala Sitharaman, who outlined a comprehensive strategy to boost the nation's technology infrastructure and attract foreign investment.

The centerpiece of this initiative is a tax holiday extending until 2027 for "any foreign company who provides services to any part of the world outside India by procuring datacenter services in India." This move recognizes "the need to enable critical infrastructure and boost investment in datacenters," according to Sitharaman.

The scheme requires that services be procured through an Indian reseller, creating a framework that benefits both international cloud providers and local businesses. This approach positions India as an attractive destination for companies looking to serve global markets while leveraging cost-effective infrastructure and skilled workforce.

However, potential participants will need to carefully evaluate the legal implications of storing data in India, particularly regarding data sovereignty, privacy regulations, and compliance requirements that may vary significantly from other jurisdictions.

Complementary Measures to Strengthen Tech Ecosystem

Beyond the cloud tax holiday, the budget includes two other significant measures aimed at strengthening India's technology sector:

1. Manufacturing Equipment Import Tax Break: A five-year tax exemption for companies importing manufacturing equipment for use by Indian companies. This initiative targets the development of high-tech manufacturing capabilities, potentially reducing dependency on imports and fostering domestic production of advanced technology components.

2. Skilled Worker Attraction Program: A tax exemption on offshore income for skilled workers who relocate to India and remain for at least five years. This measure addresses the brain drain phenomenon, where many talented Indian tech professionals have historically sought opportunities abroad.

These complementary policies create a holistic ecosystem designed to attract both capital and talent, addressing multiple challenges in India's technology sector simultaneously.

Regional Tech Developments Across Asia

NTT Data Expands Vietnam Operations

Japanese technology services giant NTT Data has signed a memorandum of understanding with Vietnamese software development company CMC Global to enhance offshore development capabilities for the Japanese market. This partnership leverages Vietnam's growing IT talent pool and aims to strengthen capabilities in advanced technologies like artificial intelligence.

The collaboration combines NTT Data's customer base and expertise in large-scale system development with CMC Global's technological strength and globally standardized development quality. Vietnam has been actively working to expand its information technology industry, including both manufacturing and services, making it an increasingly attractive destination for offshore development.

Japan Democratizes Space Data Access

Japan's Aerospace Exploration Agency (JAXA) has released sample code for Model Context Protocol (MCP) integration with Claude Desktop, enabling users to access Earth observation data through a conversational AI interface. This development opens up access to over 90 datasets collected by various Japanese satellites.

The release includes a comprehensive guide and encourages users to test the integration, potentially democratizing access to valuable space-based Earth observation data that was previously accessible only to specialized researchers and organizations.

Samsung Capitalizes on Memory Market Boom

Samsung Electronics reported record-breaking financial results for Q4 2025, with revenue reaching ₩93.8 trillion ($65.5 billion) and profit of ₩20.1 trillion ($14 billion). This represents a dramatic improvement from the same quarter in 2024, when the company posted just ₩6.5 trillion ($4.5 billion) in profit.

The company attributed this surge to "expanded sales of HBM and other high-value-added products, as well as the overall market price surge." High Bandwidth Memory (HBM) has become increasingly critical for AI applications, positioning Samsung to benefit from the artificial intelligence boom.

Additionally, Samsung teased the launch of a new privacy feature designed to protect against "shoulder surfing" when viewing sensitive information in public spaces. The company indicated this feature would be coming "to Galaxy very soon," likely as part of its upcoming Galaxy S series launch, traditionally held in February.

Grab's Success with AI Coding Tools

Singapore-based super-app company Grab has revealed impressive adoption rates for Cursor, an agentic coding tool. Since introducing Cursor in late 2024, 98 percent of technical employees have become monthly active users, with about 75 percent using it weekly.

Notably, the tool's appeal extended beyond engineering teams, with non-technical departments incorporating it into their workflows. Cursor's suggestion acceptance rate of around 50 percent significantly exceeds the industry average of 30 percent, indicating high relevance and quality of recommendations.

Grab attributes this success to continuous feedback loops and environment-specific tuning that ensures suggestions align with the company's codebase and conventions. This case study demonstrates how AI coding assistants can achieve meaningful productivity gains when properly integrated into organizational workflows.

Implications for the Global Cloud Market

India's tax holiday represents a significant shift in the global cloud computing landscape. By offering such an extended incentive period, India is positioning itself as a serious competitor to established cloud hubs in the United States, Europe, and Singapore.

The 20-year timeframe provides long-term certainty for infrastructure investments, which typically require substantial capital expenditure and have multi-year payback periods. This stability could be particularly attractive for hyperscale cloud providers looking to expand their global footprint while optimizing costs.

However, the success of this initiative will depend on several factors:

• Infrastructure Development: The ability to rapidly scale data center capacity to meet global demand
• Regulatory Environment: Clear and consistent policies around data protection, cross-border data flows, and operational requirements
• Talent Availability: Sufficient skilled workforce to support global cloud operations
• Connectivity: Robust international connectivity to ensure low-latency service delivery

As the global demand for cloud services continues to grow exponentially, driven by trends like AI, IoT, and digital transformation, India's initiative could reshape how and where cloud infrastructure is deployed. The combination of cost advantages, skilled talent, and now significant tax incentives makes India an increasingly compelling option for global cloud service providers.

This strategic move also reflects a broader trend of countries competing to become technology hubs, recognizing that digital infrastructure and services represent critical economic opportunities in the 21st century economy.