Union budget 2026-27: Key takeaways for the telecom and digital infrastructure industry

The union budget 2026-27 has set a clear direction for India’s digital backbone, with a sharper push for networks and next-generation digital infrastructure. Alongside a higher telecom outlay and a larger allocation for Bharat Sanchar Nigam Limited (BSNL), the budget has also introduced incentives aimed at accelerating data centre, semiconductor and artificial intelligence (AI) infrastructure investments. Leaders from across the ecosystem share their perspectives on the road ahead…

 

 

 

 

Vinish Bawa, Leader – Telecom, PwC India

“Union budget 2026 positions India as a global data capital.

1. A landmark tax holiday until 2047 has been announced for foreign companies providing global cloud services from Indian data centres
2. To simplify compliance, a 15 per cent safe harbour on costs has been established for related-party data centre services.
3. The Budget allocates Rs 400 billion for India Semiconductor Mission (ISM) 2.0 to bolster the semiconductor and AI hardware ecosystem.

These measures aim to bridge the capacity gap and accelerate capital-intensive investments in scalable digital infrastructure.  

Net impact: faster capacity addition, stronger global capital inflows, and sharper positioning for India as a scalable, cost-competitive data centre hub. “

 

Abhishek Garg, Director, DBG Technology Private Limited

“Union budget 2026 further strengthens the foundation for the government’s enhanced capital expenditure and progressive industry-focused schemes — particularly the expansion of the ISM 2.0 with a significant outlay — signal a transformative push for electronics, semiconductors and high-value tech manufacturing. The emphasis on electronics components manufacturing, skills development and strategic investment incentives is a decisive step toward reducing import dependence and scaling indigenous capabilities. We are encouraged by this forward-looking policy framework that aligns with our commitment to innovation, Make in India, and empowering the Indian technology ecosystem. We believe the budget focuses on accelerating growth for the industry but will also help in strengthening India’s position in the global technology landscape, inspiring confidence for long-term investment, job creation, and sustained competitiveness.” 

 

 

 

Ankit Goel, Chairman & Founder, Spaceworld (Digital Infrastructure & Telecom)

“India is investing with intent in next growth foundations – a Rs 12.5 trillion public capex allocation, explicit tax exemptions for data centres, AI push via ISM 2.0, telecom/digital focus, and MSME/manufacturing support signal long-term competitiveness. Growth hinges on reliable connectivity, efficient data flows, and scalable AI ecosystems. With nearly one billion Indians online and digital industries accelerating, these rival roads and power. The budget shifts from short-term capacity to long-term architectural thinking – via capital formation, digital inclusion, and future-ready infra. This is critical for Viksit Bharat 2047 and global edge. India’s growth enters a smarter phase. Direction is set; impact depends on execution.”

 

Sunil Gupta, Co-founder, Chief Executive Officer & Managing Director, Yotta Data Services

The union budget 2026 marks a decisive and well-thought-out shift in how India approaches cloud and data centres, recognising them as long-term strategic infrastructure that underpins AI adoption, digital public services, and economic growth. The announcement of a tax holiday till 2047 for global cloud operators setting up data-centre infrastructure in India is a strong signal aimed at accelerating capital inflow, early capacity creation, and faster enterprise cloud adoption at scale. 

At the same time, the introduction of a clear safe harbour provision including a defined 15 per cent tax on cost for cloud and data-centre services delivered through Indian operating entities addresses a different but equally important objective: long-term certainty and scalability. In practice, while the tax holiday helps global players enter India quickly, large-scale and mission-critical operations naturally gravitate towards Indian entities because predictability in taxation, compliance, and regulatory alignment matters far more than headline tax rates as businesses scale. As cloud and AI workloads move from experimentation to regulated and business-critical deployment, global cloud providers are therefore unlikely to own and operate all physical infrastructure themselves. Instead, they will increasingly adopt asset-light models outsourcing both colocation and high-performance graphics processing unit (GPU) infrastructure to trusted Indian partners while focusing on platforms, software, and customer engagement. This allows them to scale rapidly, manage capital and technology risk, and operate within a stable and transparent tax framework under the safe harbour regime. 

For sovereign Indian platforms like Yotta, this evolution creates strong complementarity rather than competition. As hyperscalers localise through Indian entities and expand their India footprint, demand for hyperscale data centres combined with GPU-dense, AI-optimised infrastructure will rise sharply – areas where Indian operators with deep local execution capabilities, regulatory alignment, and energy-backed capacity are uniquely positioned. 

In that sense, budget 2026 does more than attract global investment. It expands the overall AI and cloud market while anchoring global platforms within the Indian ecosystem, reinforcing the strategic role of Indian cloud and data-centre companies as the sovereign, compliant, AI-ready infrastructure backbone of India’s digital future.”

 

Bimal Khandelwal, Chief Executive Officer, STT GDC India

“The union budget 2026 marks a decisive policy intervention that holistically addresses capital formation, demand creation, and long-term sustainability for India’s data centre sector. The proposed tax holiday till 2047 for foreign cloud providers using Indian data centres is expected to unlock increased foreign direct investment, position India as a preferred global digital infrastructure destination, and materially enhance its competitiveness in attracting hyperscale and AI-led workloads. This, in turn, will drive sustained demand for low latency, resilient digital infrastructure critical to enabling India’s Viksit Bharat 2047 digital economy agenda. We welcome the government’s integrated approach, which aligns fiscal incentives with infrastructure readiness and sustainability priorities. At STT GDC India, we are well positioned to support this next phase of growth through scalable, AI-ready, and sustainable data centre infrastructure that underpins India’s digital future.”

 

 

 

Anuj Khurana, Co-founder & Chief Executive Officer, Anaptyss

“Union budget 2026-27 sends a clear signal that India’s digital competitiveness will be built on scalable AI adoption, stronger digital infrastructure, and enterprise-led innovation. Continued focus on compute, data, and talent will help technology and services organisations move from efficiency-driven models to outcome-led, AI-first operations that support global enterprises. Equally important is the emphasis on predictability and long-term policy alignment, which enables enterprises to make sustained investments in global delivery, engineering capabilities, and advanced digital platforms. This will reinforce India’s position not just as a technology services hub, but as a strategic innovation partner for global businesses.”

 

 

 

 

Pinkesh Kotecha, Chairman and Managing Director, Ishan Technologies

“The union budget 2026-27 marks a decisive shift in positioning digital infrastructure as a strategic national asset. Long-term tax holiday for global cloud players using Indian data centres and safe harbour provisions provide much-needed certainty and the recognition of cloud and DCs alongside core infrastructure send position India as a credible hub for digital infrastructure serving global markets. What stands out is the strong alignment between policy intent and execution, from sovereign cloud enablement and AI-ready data centre capacity to accelerated city-level digital infrastructure across Tier 2 and Tier 3 markets. This clearly favours players with pan-India footprints and the ability to deliver connectivity, data centres, cloud, and managed services as an integrated stack. As enterprises, governments, and high-tech industries increasingly run mission-critical, data-intensive workloads, continued support for compliant, India-hosted cloud and resilient networks will be essential. The budget lays a solid foundation for infrastructure-led digital growth and positions integrated infrastructure providers to emerge as default digital partners in India’s next phase of industrial, cloud, and AI-driven expansion” 

 

Manoj Kumar Singh, Director General, Digital Infrastructure Providers Association (DIPA)

“Union budget 2026 delivers a transformative vision for India’s digital future. The tax holiday until 2047 for cloud providers leveraging Indian data centres is bold policy-making that positions us as a global hub while advancing our $3 trillion digital economy ambition. What is truly significant is recognising digital infrastructure as the great enabler. Robust telecom networks and data centres do not serve one sector—they power fintech innovations, telemedicine reaching villages, smart manufacturing, AI research, and digital governance. When we strengthen this foundation, we catalyse growth across every economic horizon.
The Rs 100 billion SME Growth Fund and Rs 20 billion top-up for the Self-Reliant India Fund are the game-changers. Digital infrastructure deployment relies heavily on SMEs and micro enterprises—from tower installation to network maintenance, from fibre laying to equipment manufacturing. These funds will help scale high-potential firms while keeping smaller players viable, creating a resilient supply chain. The sustainability measures—exempting customs duty on battery storage and solar glass—demonstrate foresight and powering EV. We are building infrastructure that serves both Viksit Bharat 2047 and Net Zero 2070 commitments. Green data centres and energy-efficient networks define our future. The mandatory Indian reseller framework ensures technology transfer and capability building. This budget validates that strengthening our digital backbone enables India’s transformation into a digitally empowered, economically vibrant, and environmentally responsible nation.”

 

 

 

 

Subhasis Majumdar, Managing Director, Vertiv India

“The union budget 2026-27 positions India as a serious global player in digital infrastructure and cloud services. The long-term tax holiday for foreign cloud companies until 2047 is a game-changing move. This move will dramatically improve investment and make India significantly more competitive. As a global leader in critical infrastructure that powers data centres, AI factories, hyperscale campuses, and cloud environments, we see this as a direct accelerator for the high-density, high-efficiency facilities that will define tomorrow’s digital economy. Our advanced power systems, liquid cooling technologies, and integrated rack solutions are purpose-built to support exactly this scale of sustainable, AI-ready build-out. Equally important is the much-needed relief given to the broader IT services industry. These measures will bring huge relief in compliance burden and allow companies to focus on business growth and innovation. Together, this will attract large global cloud investment, drive massive new data centre capacity, create a huge multiplier effect for power, cooling, critical infrastructure and digital ecosystem players. We firmly believe that this budget will accelerate India’s emergence as a global digital infrastructure powerhouse.”

 

 

Pratap Mane, President & Country Head – India, Colt DCS

“The union budget 2026-27 marks a pivotal moment in accelerating India’s digital infrastructure ambitions. The extension of the tax holiday to 2047 for foreign cloud providers leveraging Indian data centre capacity is a bold, investor-attractive policy that stands out globally for its long-term horizon. This provides the fiscal predictability essential for committing to large-scale, capital-intensive developments, directly supporting our ongoing expansion and efforts to deliver hundreds of megawatts of AI-ready, hyperscale capacity. The 15 per cent safe harbour for related-party data centre services further streamlines operations for international players building in India, reducing complexity and enhancing cost efficiency in a high-growth environment. We see this as a clear catalyst for India’s rise as a preferred global hub, enabling operators like Colt DCS to scale sustainably and deliver the trusted, customer-centric infrastructure that global hyperscalers demand.”

 

 

 

Sudheer Narayan, Partner, Bain & Company in India

“The budget sends a clear signal that electronics and semiconductors remain a top national priority. Building on the success in electronics manufacturing, especially mobile phones, the focus now shifts to scale, higher domestic value addition, and deeper integration with global value chains. Continued support through ISM 2.0 and higher ECMS outlays reflects a move beyond capacity creation toward building scale, Indian IP, stronger supply chains, and priority areas such as power electronics. This approach should help attract sustained global investment.”

 

 

 

Sachin Panicker, Chief AI officer, Fulcrum Digital

“The union budget 2026-27 recognises that artificial intelligence is no longer an experimental technology but a strategic lever for governance, productivity and economic growth. It has specifically highlighted AI applications to enhance governance and introduced measures such as the AI Mission, National Quantum Mission and significant new funding through the Anusandhan National Research Foundation and the Research and Development (R&D) and Innovation Fund. At Fulcrum Digital, we believe the 21st century’s true potential lies in shifting from simple automation to intelligence amplification (IA). By backing R&D and innovation funds, the government is providing the essential fuel for enterprises to move beyond experimentation to real-world, scalable impact. Equally important is the decision to substantially enhance the safe harbour threshold for IT services from Rs 3 billion to Rs 20 billion, which will significantly reduce compliance friction and improve operating certainty for a much broader set of technology firms. This move aims to strengthen India’s technology ecosystem by expanding research capacity, supporting translational innovation and building future capabilities in sectors such as agriculture, healthcare, education and public services. For this framework to create measurable impact we need coordinated implementation with industry and academia, greater focus on data and compute infrastructure, and skilling pathways that align with the evolving demand for specialised AI talent.”

 

 

Prem Rajani, Managing Partner, Rajani Associates

“The union budget 2026 increases the Electronics Components Manufacturing Scheme outlay to Rs 400 billion under ISM 2.0, boosting supply chains, component availability, and semiconductor manufacturing. Industry-led research and training centres will advance technology and skills, benefiting electronics manufacturers, equipment providers, and allied sectors.

The budget 2026 also streamlines the tax landscape for the technology sector by consolidating various services into a single “Information Technology Services” category with a 15.5 per cent safe harbour margin and introducing a fast-track process to conclude unilateral advance pricing agreements within two years. These reforms aim to provide significant tax certainty and shift toward a trust-based system, allowing global technology firms to prioritise innovation over prolonged legal disputes. Additionally, a tax holiday till 2047 for foreign cloud providers acts as a long-term strategic “hook” to attract global tech giants by ensuring fiscal stability and reducing the cost of operation for data centres, thereby accelerating India’s transformation into a premier global digital hub. For companies within the sector, this in turn will build emphasis on AI ethics, data privacy, cross-border data, IP structuring, transfer pricing, cybersecurity, and regulatory compliance.”

 

 

 

Vishak Raman, Vice President of Sales, India, SAARC, SEA & ANZ, Fortinet

“Budget 2026 reflects India’s intent to strengthen its position as a trusted hub for digital services, cloud, and advanced technologies. Steps to simplify the IT services framework, encourage data centre investments, and push wider AI adoption are aimed at building long-term competitiveness. At the same time, as digital infrastructure scales, complexity, and cyber risk increase. Cyber risk today is continuous, not episodic, and organisations need to plan for resilience as a core business requirement. Embedding security into digital foundations will be critical to protecting data, ensuring continuity, and maintaining trust as India’s digital economy continues to expand.”

 

 

 

 

Narendra Sen, Founder & Chief Executive Officer, RackBank Data Centers

“We welcome the union budget 2026-27 as a strong and investor-positive signal at a time when global capital is actively comparing India with other data centre markets. India already contributes nearly 20 per cent of the global data economy, while the global data centre market stands at approximately 120 GW. Even capturing one per cent of this opportunity highlights the scale of the current capacity gap and the headroom for growth. With deployed capacity still at an early stage, India has the potential to reach nearly 10 GW over the next five years, translating into investments of close to $70-100 billion across data centre infrastructure. Long-term tax certainty through the proposed tax holiday significantly improves return visibility for global investors, including infrastructure funds and real estate-focused capital, and makes Indian data centre platforms more attractive as a long-term asset class. India’s advantage is not limited to policy support. Build costs in India are among the lowest globally at approximately $5 million per megawatt, compared to $10-12 million in several international markets, materially improving project economics. Combined with domestic manufacturing capability, reduced import dependence, and a strong clean energy ecosystem across solar and wind, the operating environment is structurally competitive. Equally important is India’s geographic positioning. From locations across eastern and western India, data centres can serve South Asia, Southeast Asia, the Middle East and parts of Africa within low latency thresholds, enabling access to nearly half of the world’s population. This combination of market scale, cost efficiency, energy availability and policy clarity positions India as a credible regional and global hub for digital infrastructure. For companies like RackBank, this budget strengthens confidence to expand capacity, attract global capital and support the delivery of scalable, secure and sovereign digital infrastructure for both Indian and international customers.”

 

 

 

Manpreet Singh Ahuja, Chief Clients Officer & TMT Leader, PwC India

“For telecom and connectivity-led businesses, the direction is clear: capital efficiency improves when regulation simplifies, supply chains strengthen, and domestic electronics capacity expands. ISM 2.0 and the expanded electronics components manufacturing scheme could reinforce the device-to-network stack, and create a stronger backbone for the next-generation enterprise and consumer use cases.”

 

 

 

 

Sachin Tayal, Managing Director, Protiviti Member Firm for India

“The 2026 budget clearly signals an intent to drive India’s growth towards a more sustainable and future-ready economy. An important provision has been made for data centres and cloud service providers operating in India, which offers a long-term tax holiday. This strengthens India’s goal of becoming a global centre for cloud, AI, and data-led services and makes digital infrastructure a national priority. It is a significant step toward expanding the digital economy, drawing in international investment, and producing skilled jobs. The budget signals a commitment to steady, sustainable, and broadly distributed growth. By prioritising areas such as MSMEs, manufacturing, skills development, green energy, and digital systems, the intent is to foster innovation across the entire economy rather than confining it to a limited number of major sectors. Furthermore, the persistent focus on ESG principles underscores the belief that contemporary growth must be grounded in transparency, trust, and robust governance.
For businesses, policy intent now needs to be matched with execution. Companies must strengthen their operating models, manage risks better, use technology responsibly, and also invest in cybersecurity and compliance. Companies that will combine growth with resilience and strong governance will be best equipped to compete on a global scale and make a significant contribution to establishing India’s long-term economic leadership”. 

 

Balaji Thirumalai, Partner, Bain & Company in India

“The budget’s announcement of ISM 2.0 sends a strong signal that India is committed to building a full-stack semiconductor ecosystem, extending beyond fabs and OSATs to IP, semiconductor equipment, and materials. The expanded ECMS support with an investment of Rs 400 billion further strengthens component localisation, helping deepen domestic value chains and position India more firmly within the global semiconductor landscape.”