Jensen Huang, CEO of Nvidia, predicted that AI infrastructure will replicate the massive employment scale the internet created in India, speaking at the 3DExperience World event in Houston shortly after New Delhi announced a sweeping 20-year tax holiday for cloud service data centers.
The Budget 2026 tax incentive, extending until 2047, targets foreign companies providing cloud services through India-based data centers. IT Minister Ashwini Vaishnaw estimated the policy could attract approximately $200 billion in investment—a figure that would represent one of India's largest single-sector foreign capital commitments if realized.
Huang's enthusiasm for India's potential extended beyond direct construction employment. "The actual building of the data center is maybe 5,000 people, 10,000 people. They are electricians, plumbers, and construction workers," Huang told Outlook Business. "Think about the entire supply chain, pipes, concrete, design, architecture, project management, and then, once the data center is operational, the ongoing operations."
The Nvidia chief positioned artificial intelligence as fundamental infrastructure comparable to water, electricity, and the internet itself—a framing that serves both his company's commercial interests and India's ambitions to move beyond software services into hardware and advanced technology manufacturing.
In India, as across the subcontinent, scale and diversity make simple narratives impossible—and fascinating. The country's 1.4 billion population provides both massive market opportunity and complex implementation challenges. Data centers require not just favorable tax treatment but reliable power infrastructure, water resources for cooling systems, and fiber-optic connectivity—elements that vary dramatically across Indian states.
The announcement comes as India positions itself as an alternative to China in global technology supply chains, leveraging democratic governance and improving business climate alongside growing technical talent. The government's simultaneous pursuit of Make in India manufacturing and digital infrastructure development reflects this dual strategy of hardware and services advancement.
Industry observers note considerable skepticism about whether tax holidays alone can overcome India's infrastructure deficits. Power supply remains inconsistent in many regions, land acquisition processes involve Byzantine regulatory approvals across state and central governments, and competition for skilled engineers between existing IT services firms and new data center operations could drive wage inflation that undermines cost advantages.
The tax holiday structure also raises questions about revenue sustainability. While attracting $200 billion in investment would create substantial economic activity, the 20-year exemption period means India forgoes immediate tax revenue in exchange for long-term employment and ecosystem development—a calculation that assumes these facilities will generate taxable economic activity beyond their own operations.
State-level competition will likely intensify around data center attraction. Gujarat, Maharashtra, Tamil Nadu, and Karnataka each offer different advantages: Gujarat's infrastructure and business-friendly administration, Maharashtra's proximity to financial centers in Mumbai, Tamil Nadu's manufacturing expertise and power supply, and Karnataka's concentration of tech talent in Bengaluru. The federal tax holiday will be supplemented by state-level incentives around land, power tariffs, and regulatory clearances.
Nvidia's commercial stake in India's AI buildout is substantial. The company's graphics processing units (GPUs) power most AI training and inference workloads globally. India's data center expansion would create significant chip demand, though current US export controls on advanced semiconductors to certain countries complicate the technology transfer picture.
The broader question remains whether India can execute at the scale Huang's optimism suggests. The country successfully built a world-leading IT services sector over three decades, creating millions of jobs and establishing companies like Tata Consultancy Services, Infosys, and Wipro as global players. Data center infrastructure represents a different challenge—capital-intensive hardware rather than human-capital-intensive services—requiring capabilities India is still developing.
India is hosting the India AI Impact Summit from February 16-20, 2026, positioned as the largest AI conference globally. The timing of the tax holiday announcement ahead of this event suggests coordinated government messaging designed to attract commitments from global technology firms during high-visibility proceedings.
