Indian Government Unveils New Data Centre Incentives Amid Global Tensions

The Indian government has proposed a significant boost to its data centre sector with the introduction of new incentives aimed at promoting local industry and reducing dependence on imports. The budget announcement comes as global tensions rise, with concerns over supply chain disruptions and cybersecurity threats increasingly affecting the technology sector. In response, India’s finance minister has introduced tax breaks and investment schemes designed to encourage domestic data centre development. Key highlights include a 10% depreciation allowance for data centres in the next three years, allowing companies to claim tax benefits on new equipment purchases. Additionally, the government has proposed a special economic zone (SEZ) policy for data centres, offering streamlined regulatory approval processes and reduced power tariffs. The move is seen as an attempt by the Indian government to reduce its reliance on imports of rare earth elements (REEs), crucial components used in the production of high-performance magnets needed for data centres. India has long been a major supplier of REEs, but recent global tensions have disrupted shipments from China, which dominates global REE exports. Industry analysts say the new incentives are expected to drive significant investment in India’s data centre sector, with many international companies already eyeing the country as a potential hub for their operations.