In a significant move to bolster its digital infrastructure, India is offering a 20-year tax holiday to foreign companies that set up and operate data centres within the country. This initiative is designed to attract international investment and support the burgeoning digital economy, emphasizing India's commitment to becoming a global technology hub.

The decision is part of a broader strategy to enhance the country's data storage capabilities, ensure data sovereignty, and stimulate economic growth. By incentivizing foreign firms to use local data centres, India aims to reduce reliance on overseas facilities while simultaneously boosting domestic employment opportunities.

Officials have highlighted that the tax incentives will not only appeal to large tech companies but also encourage startups and smaller firms to invest in India’s digital landscape. This approach is seen as a way to foster innovation and improve the overall competitiveness of the country in the global market.

The announcement has drawn praise from various industry stakeholders, who see it as a positive step towards creating a more robust digital ecosystem. Experts believe that the establishment of local data centres will enhance infrastructure resilience and provide faster services to consumers.

However, some critics caution that while the incentives may attract international players, there must also be a focus on ensuring that local data centre operations adhere to cybersecurity and regulatory standards to protect sensitive information.

As India continues to enhance its digital capabilities, the 20-year tax holiday represents a pivotal effort to position the country as a leader in the information technology sector. The impact of this initiative will be closely monitored, with expectations that it could contribute significantly to economic development and technological advancement in the years to come.