Government aims to position India as a global data services hub with 21-year tax exemption and streamlined investment rules for NRIs.
SHARJAH – India’s latest budget proposals have introduced significant incentives for Non-Resident Indians (NRIs) and foreign companies as part of a broader strategy to attract global capital and technology investments, officials confirmed on Sunday.
In a major move, the investment limits under the Portfolio Investment Scheme for NRIs and persons of Indian origin have been raised. Individual investment limits have doubled from 5% to 10%, while the aggregate ceiling for all such investors in a listed Indian company has increased from 10% to 24%.
The government has also simplified property sales for non-residents. When selling immovable property to a resident Indian, an NRI’s Permanent Account Number (PAN) will now be sufficient for tax deduction at source, eliminating the previous requirement for a separate tax account number.
For international businesses, the budget offers a substantial tax incentive aimed at making India a global data services hub. Foreign companies that provide services outside India using data centre services procured from within the country will be eligible for a 100% tax exemption on profits for the next 21 years, up to 2047.
To provide further clarity, safe harbour rules will apply to related-party transactions, deeming 15% of gross receipts as taxable income for Indian entities providing data centre services to foreign affiliates. Additionally, foreign technicians and experts working on notified projects in India will be exempt from Indian tax on their foreign income for five years, even if they qualify as residents under local laws.
These measures align with India’s push to expand its data centre capacity from 1.5 GW to 14 GW by 2035, backed by proposed investments totalling $67.5 billion from global tech giants including Microsoft, Amazon, and Google over the next five years. Hyderabad is emerging as a key growth hub, offering competitive electricity costs—less than half of those in the United States.
The proposals also extend to the tourism and hospitality sector, where rising middle-class consumption and airport expansion are driving hotel development. The budget allows full deduction of capital expenditure for new hotel projects, excluding land costs, to encourage investment in three-star and other budget accommodations.
United Arab Emirates Dirham Exchange Rate
