Incentivising setting up of Cloud, Data Centres here means data to be stored here, says FM Sithraman

Union Finance Minister Nirmala Sitharaman speaks in the Lok Sabha
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Finance Minister Nirmala Sitharaman on Wednesday strongly refuted the allegation that proposed tax holiday to global data centre will mean transporting data abroad. She also said that States will get an additional ₹2.7 lakh crore during FY27 through devolution.

Sitharaman was responding to the general discussion on the Union Budget for the fiscal year 2026-27.

 “Leader of the Opposition Shri Rahul Gandhi expressed concerns over Artificial Intelligence and data. I want to underline that we are incentivising setting up of Cloud and Data Centres in India, so that the data is stored here and our youth gets employment opportunities,” Sitharaman said. Further, she said, the India AI Mission has a dedicated allocation of ₹1,000 crore for 2026-27.

In her Budget speech, the FM has proposed to provide tax holiday till 2047 to any foreign company that provides cloud services to customers globally by using data centre services from India. It will, however, need to provide services to Indian customers through an Indian reseller entity, she said. Later sources said that any foreign company providing cloud services through a data centre in India will get tax exemption, subject to meeting four conditions.

These conditions include the foreign company must be notified. Second, the data centre company in India from which services are taken must be an Indian company. Third, the data centre must be notified by MeitY. Fourth, the services by the foreign company to Indian users must be provided through an Indian reseller entity, being an Indian company.

Taking about funds to States, Sitharaman said that in the coming year FY26-27, the States’ share is estimated at ₹25.44 lakh crore, which will be devolved to them — an increase of ₹2.7 lakh crore from last year FY25-26. “The Finance Commission itself, after studying this in detail, has stated in its report that the money which has to go from the Centre to the States, taking the years 2018–19 to 2022–23 as examples and examining them, has clearly said that whatever amount has to go from the Central Government to the State Governments has been given. There is no scope for any doubt in this for the States,” she said.

She also emphasised that cess and surcharge collected by the Centre are given to the States for development work in various sectors. “This is separate from the 41 per cent of funds allocated to the States,” she said.

Debunking claims of a shortage of fertilisers in the country, she said, there is enough for farmers, and the government has made a budgetary allocation of ₹1.71 lakh crore for its import to support farmers. Sitharaman also gave a point-by-point rebuttal to Rahul Gandhi’s claims that India has buckled under US pressure while signing the interim trade agreement with Washington.

“Leader of the Opposition Shri Rahul Gandhi also expressed concerns over geopolitics, energy & weaponisation of finance. He said that the budget acknowledges these challenges but he didn’t read the budget and the steps announced in it to address these challenges,” she said while listing measures such as Economic Stabilization Fund, Technology in National Security Fund (TNSF) beside others.

Published on February 11, 2026