India has proposed zero taxes for foreign cloud service providers until 2047 on services sold outside the country, provided they process workloads from Indian data centers.

On February 1, Finance Minister Nirmala Sitharaman announced tax holidays—effectively zero taxes—on income from cloud services earned abroad. Sales to Indian clients will be subject to standard rates.

This announcement comes as American giants like Amazon, Google, and Microsoft are ramping up their global capabilities to support the growth of AI workloads.

Meanwhile, India is becoming an attractive destination for new investments, offering a large talent pool and increasing demand for cloud services. It is positioning itself as an alternative to the U.S., Europe, and parts of Asia.

In October, Google announced a $15 billion investment to establish an AI hub in the country. In December, Microsoft followed suit with an even larger investment of $17.5 billion. Amazon plans to invest $35 billion by 2030.

Domestic firms are also expanding their capabilities. In November, Digital Connexion announced an $11 billion investment by 2030 to develop AI-focused data centers with a capacity of 1 GW. Adani Group, in partnership with Google, has its own $5 billion project planned.

However, tech giants and startups may face challenges due to issues with stable power supply and water shortages in India.

Infrastructure Race

Other countries and regions are also taking significant steps to build the infrastructure necessary for AI operations.

In Texas, regulators approved energy infrastructure developer Pacifico Energy to construct a facility to support data centers with a capacity of 7.65 GW, which will become the "largest gas project" in the U.S.

GW Ranch is designed to serve hyperscale data centers. Unlike traditional power plants, it is being developed without connection to the main power grid, allowing clients to source energy directly from local sources without relying on Texas's grid.

Meanwhile, British Columbia will require most new AI projects and data centers to participate in a competition for access to clean energy. The Canadian province is taking measures to manage the sharp increase in electricity demand.

The new competitive process aims to prevent overloads on the power system and ensure availability and reliability for existing customers.

Notably, in November, HSBC CEO Georges Elhedery stated that current revenues from AI companies may not justify the enormous computing costs.