As global hyperscalers race to invest $160 billion, Finance Minister Sitharaman’s audacious 2047 vision promises to transform India from digital consumer to cyber-infrastructure command center—but only if security keeps pace with ambition.
When Finance Minister Nirmala Sitharaman stood before Parliament on February 1, 2026, to deliver her ninth consecutive Union Budget, she wasn’t just announcing fiscal allocations—she was declaring India’s intention to become the world’s digital backbone. With a tax holiday extending to 2047 for foreign cloud companies and unprecedented clarity on data centre operations, Budget 2026 represents the most aggressive technology infrastructure play in India’s post-independence history.
For enterprise CISOs navigating this seismic shift, the message is clear and urgent: India is about to become ground zero for the world’s most critical digital infrastructure. The question isn’t whether this transformation will happen—it’s whether security architectures can scale fast enough to protect it.
The $160 Billion Question
The numbers alone tell a compelling story. Investments totaling around USD 70 billion are already underway in India for data centre development, with announcements of an additional USD 90 billion in the pipeline. This isn’t speculative capital—tech giants like Google, Microsoft, and Amazon have already committed to gigawatt-scale facilities that will power AI operations across continents.
“The Union Budget 2026-27 is a significant step in strengthening India’s digital and data infrastructure,” observes Hemant Tiwari, Managing Director – India & SAARC at Hitachi Vantara. His assessment captures the industry consensus: this budget doesn’t just incentivize investment—it fundamentally rewrites the economics of global cloud infrastructure.
The centerpiece of these announcements is elegantly simple yet profoundly impactful. Foreign companies providing cloud services to customers globally using data centre services from India will receive a tax holiday till 2047. Coupled with a safe-harbour provision allowing cloud service providers to earn up to 15% profit over costs without triggering transfer pricing disputes, the government has effectively de-risked two decades of capital-intensive infrastructure investment.
Beyond Tax Breaks: The Strategic Calculus
But reducing Budget 2026 to tax incentives would be missing the forest for the trees. As Sindhu Gangadharan, Chairperson of Nasscom and President of the Indo German Chamber of Commerce, articulates: “Union Budget 2026 strengthens the policy backbone required for India to operate as a global technology and AI execution hub. The focus on cloud infrastructure and long-term clarity for cloud services directly addresses a core constraint in scaling enterprise platforms.”
Her analysis reveals a deeper strategic insight: this budget targets the fundamental bottleneck that prevents Global Capability Centers (GCCs) from evolving beyond delivery to ownership. When technology platforms are designed to run for years, predictability becomes paramount. The budget delivers this through comprehensive reforms:
Safe Harbour Revolution: The threshold for availing safe harbour for IT services has been raised from ₹300 crore to ₹2,000 crore. More significantly, the government has collapsed software development, IT-enabled services, knowledge process outsourcing, and contract R&D into a single “Information Technology Services” category with a uniform 15.5% safe harbour margin. This consolidation eliminates years of classification disputes and compliance friction.
Advance Pricing Agreement (APA) Fast-Tracking: The budget commits to concluding unilateral APAs within 2 years, with the option to extend by 6 months upon request. This replaces a process that previously took 3 to 5 years, during which companies operated in a transfer pricing limbo.
Automated Approvals: Safe-harbour approvals will now follow an automated, rule-driven process, eliminating discretionary scrutiny by tax authorities—a move that Nasscom describes as “clarity, predictability and trust-based governance.”
The Semiconductor Backbone
While data centres captured headlines, Budget 2026’s semiconductor strategy may prove equally consequential for India’s digital sovereignty. India Semiconductor Mission (ISM) 2.0 will focus on designing and manufacturing semiconductor equipment in India, manufacturing materials used in semiconductor production, creating a large design ecosystem, and further strengthening talent development initiatives, with a provision of Rs. 1,000 crore for FY 2026-27.
More revealing is the sharp increase in the Electronics Components Manufacturing Scheme (ECMS) allocation from approximately Rs. 22,000 crore to Rs. 40,000 crore—a response to receiving 149 applications against an initial expectation of 50 to 55. This oversubscription signals that global manufacturers see India not as a low-cost assembly hub but as an integrated manufacturing ecosystem.
Subhasis Majumdar, Managing Director of Vertiv India, frames this in infrastructure terms: “Our advanced power systems, liquid cooling technologies, and integrated rack solutions are purpose-built to support exactly this scale of sustainable, AI-ready build-out. This will attract large global cloud investment, drive massive new data centre capacity, create a huge multiplier effect for power, cooling, critical infrastructure, and digital ecosystem players.”
The Cybersecurity Paradox
Yet amid this enthusiasm, a troubling silence persists: cybersecurity receives minimal explicit attention as India reshapes its budget to redefine its role as a global digital infrastructure hub. While Budget 2026 invests heavily in the infrastructure layer—data centres, semiconductors, cloud services—it offers little on the security layer that must protect them.
Vishak Raman, Vice President of Sales for India, SAARC, SEA & ANZ at Fortinet, articulates the concern industry-wide CISOs are contemplating: “As digital infrastructure scales, complexity and cyber risk increase. Cyber risk today is continuous, not episodic, and organizations need to plan for resilience as a core business requirement. Embedding security into digital foundations will be critical to protecting data, ensuring continuity, and maintaining trust as India’s digital economy continues to expand.”
This observation cuts to the heart of a fundamental challenge: India is building critical infrastructure to process, store, and transmit data for customers worldwide. When a data centre in Bangalore hosts healthcare records for European patients or financial transactions for American banks, its security posture becomes a matter of international trust—and potential geopolitical leverage.
The budget’s focus on AI adoption across sectors—from multilingual agriculture tools to port risk assessment—amplifies this concern. As Rajesh Chhabra, General Manager, APAC, Large Markets at Acronis, notes: “In addition to accelerating innovation, these measures will improve the security and resilience of India’s quickly growing digital environment.” The conditional phrasing is telling: security improvements must be intentional, not assumed.
What CISOs Must Do Now
For enterprise security leaders, Budget 2026 creates both opportunity and obligation. The influx of global data centre investment will demand security expertise at an unprecedented scale. Organizations positioning themselves as trusted infrastructure providers must demonstrate not just compliance but resilience.
Three priorities emerge:
1. Architect for Sovereignty: As Gangadharan emphasizes, India must design, build, and run core platforms with confidence and continuity. For CISOs, this means embedding security-by-design principles into infrastructure from the outset, rather than retrofitting protection onto existing systems.
2. Scale Security Talent: The budget’s emphasis on skilling—from AVGC content creator labs to strengthened education-to-employment pipelines—must extend to cybersecurity. As Sandip Weling of Aptech Limited observes: “With the AVGC industry expected to require over 2 million skilled professionals by 2030, sustained hands-on training, curricula aligned with emerging technologies, and deep collaboration between government, academia, and skilling partners will be critical.” The same logic applies to security professionals.
3. Prepare for Continuous Risk: Raman’s observation that “cyber risk today is continuous, not episodic” demands fundamental shifts in security operations. CISOs must move from reactive incident response to proactive threat hunting, from periodic assessments to continuous validation, from perimeter defense to zero-trust architectures.
The 2047 Vision
Budget 2026’s true audacity lies in its timeline. By extending tax holidays and policy frameworks to 2047, the government has signaled that India’s digital infrastructure ambitions aren’t measured in election cycles but in decades. This long-term thinking creates space for patient capital and strategic investment—but also demands patient security architecture.
As Ajay Vij, Senior Country Managing Director of Accenture in India, observes: “This Budget puts technology and AI at the centre of India’s growth agenda. Through initiatives like India Semiconductor Mission 2.0, stronger AI-led R&D, digital infrastructure, and cloud incentives, it reinforces innovation as a driver of competitiveness.”
Yet competitiveness in 2047 will be defined not just by processing power or storage capacity but by trustworthiness. When global enterprises evaluate where to locate their most sensitive workloads, they’ll assess not just tax incentives and connectivity but security maturity and resilience.
Umesh Shah, Director of New Age Technologies at Orient Technologies Limited, captures the moment perfectly: “The Union Budget sends a strong and reassuring signal for data centre and cloud investments in India. Together, these measures simplify compliance, lower execution risk, and make it easier for companies to scale data centre and cloud-led services from India.”
The operative word is “reassuring.” Trust, once established through decades of reliable, secure operations, becomes India’s most valuable infrastructure asset—one no tax holiday can buy but careless security can quickly destroy.
Conclusion: Building the Fortress
Budget 2026 has laid the economic foundation for India’s emergence as a global digital infrastructure powerhouse. It has de-risked capital investment, simplified compliance, and provided long-term policy certainty. What it hasn’t yet done—and what the security community must urgently advocate for—is establish security and resilience as first-order design principles rather than compliance checkboxes.
As foreign capital flows in and data centres proliferate, India’s CISOs face a defining challenge: prove that the country can protect the world’s data as reliably as it can store and process it. The budget has provided the economic incentives. Now comes the harder work of building operational security worthy of a nation aspiring to be the world’s digital backbone.
The race to 2047 has begun. The question for India’s security leadership isn’t whether they’ll participate—it’s whether they’ll lead.
