Data centre and AI stocks experienced significant gains following Finance Minister Nirmala Sitharaman's Union Budget 2026 announcement. According to reports from The Economic Times, E2E Networks shares surged nearly 10% to trade at ₹2,526 apiece, while Anant Raj shares jumped more than 7% to ₹570.55 in early trading. The Economic Times reports that Netweb Technologies India shares gained 5% in the early trading hours of Monday, before paring all gains and slipping into the deep red. As per Multibagg AI, Cummins India gained 1% as Nomura expects sustained growth in power demand from data centres, hospitals and real estate, which is supportive for genset and power solution suppliers. However, Adani Enterprises slipped 0.7% despite the company building a pan India data centre network through its AdaniConneX joint venture with EdgeConneX. According to Informist Media, most information technology stocks came slightly off highs after having risen as much as 1.0-2.6% on the budget speech, with shares of Wipro, Tata Consultancy Services, Persistent Systems, Infosys, and LTIMindtree up 0.4-3.0% at 1303 IST.
The government has proposed a tax holiday till 2047 for foreign companies providing cloud services globally from data centres based in India. As reported by The Economic Times, Finance Minister Nirmala Sitharaman announced this measure during her Budget 2026 speech to boost investment in data centres. The tax holiday is designed to attract foreign investment in India's data centre infrastructure and position India as a critical node in global digital infrastructure. The proposal offers a tax holiday until 2047 for foreign companies that provide global cloud services using data centres located in India, provided services to Indian customers are routed through an Indian reseller. According to Multibagg AI, the budget introduced a safe harbour of 15% on cost for instances where the company providing data centre services from India is a related entity, a move intended to simplify transfer pricing and reduce potential tax disputes. As per Informist Media, recognising the need to enable critical infrastructure and boost investment in data centres, Sitharaman proposed this tax holiday to any foreign company who provides services to any part of the world outside India by procuring data centre services in India.
While the tax holiday provides significant incentives, there are conditions attached to the benefits. According to the Budget announcement reported by The Economic Times, such companies will be required to offer services to Indian customers through Indian resellers. This requirement ensures that the tax benefits are tied to actual service delivery within the Indian market rather than purely offshore operations. The move is aimed at positioning India as a critical node in global digital infrastructure and providing long-term structural positives for AI and data centre ecosystem stocks. As per Multibagg AI, the 'reseller hook' also reinforces India's tax sovereignty, with industry experts noting that data centres are capital-expenditure-heavy and that the long-term tax certainty supports planning and investment for hyperscalers. As reported by Informist Media, Sitharaman stated that 'Sale of such services to Indian users shall be made through an Indian reseller entity and taxed appropriately' during her Budget speech.
The tax holiday announcement comes amid significant global investment in India's data centre infrastructure. India's data centre market is currently estimated to be worth $10 billion, with around $1.2 billion revenue generated in FY24, according to a recent report by Anarock. As per JLL, India is expected to add 795 MW of new capacity by 2027, taking the total capacity to 1.8 GW. A research note by S&P Global from 2024 estimated that more than $100 billion will be invested in such facilities in the region over the next five years. The spending will capitalise on strong data growth and the rise in artificial intelligence, cloud computing and digitalisation. India currently has a leased data centre capacity of 1-3 GW, which is the highest compared to other emerging markets like Indonesia, Malaysia, Philippines, Thailand and Vietnam. Last month, Union IT Minister Ashwini Vaishnaw said that private investments in India's AI infrastructure could double from last year's $70 billion by the end of the ongoing financial year (FY26).
Market analysts view the tax holiday as a significant long-term catalyst for India's data centre ecosystem. According to The Economic Times, Emkay Global has highlighted Anant Raj as a key beneficiary of India's data centre build out, with a target price of ₹800 implying meaningful upside from current levels. The proposal could lower the effective tax burden and offer policy certainty until 2047, with analysts noting that by signalling data centres and cloud infrastructure are strategic priorities, the government is positioning India as a global digital hub for hyperscalers and global cloud players expected to expand capacity in India. As per Multibagg AI, the tax holiday is a clear signal of the government's intent to make India a globally competitive destination for data centres and cloud computing, with the policy expected to have a lasting positive impact on India's technology landscape for decades to come. HDFC Securities noted that the proposal demonstrates long-term strategic thinking, stating that 'By enabling critical infrastructure and boosting investment in data centres, this measure positions India favourably in the global digital economy for decades to come'. Varun Babbar from Qlik emphasised that 'The Budget's focus on attracting global cloud and data centre investment is a strong signal of India's intent to become a serious digital infrastructure hub'.
