Sector snapshot
FDI equity into computer software and hardware rose 78% in FY2025-26 to USD 14 bn: USD 13,946 mn against USD 7,814 mn the year before (DPIIT FDI Fact Sheet, March 2026). NASSCOM expects India’s technology industry revenue to cross USD 315 bn in FY2025-26, growth of 6.1%, with 5.95 million people employed, up from 5.82 million in FY2024-25 (NASSCOM Strategic Review 2026). Foreign capital is moving beyond service delivery into AI compute, cloud and data centres.
| Indicator | Figure | Source |
|---|---|---|
| Technology industry revenue, FY2025-26 | USD 315 bn (estimate); growth of 6.1% | NASSCOM |
| FDI equity into computer software and hardware, FY2025-26 | USD 13,946 mn vs USD 7,814 mn in FY2024-25 | DPIIT |
| People employed by the technology industry, FY2025-26 | 5.95 mn (5.82 mn in FY2024-25) | NASSCOM estimate |
| Start-ups recognised by DPIIT | 212,283 as on 31 January 2026 | PIB |
| FDI equity into computer software and hardware, April 2000 to March 2026 | USD 124.6 bn, 16% of the total, second only to the services sector | DPIIT |
Four themes stand out:
- Second-largest FDI recipient since 2000. Computer software and hardware drew USD 124.6 bn of FDI equity from April 2000 to March 2026, 16% of the total and second only to services (DPIIT).
- Hyperscalers are building AI capacity. Amazon (over USD 35 bn across its businesses to 2030), Microsoft (USD 17.5 bn over four years) and Google (USD 15 bn over five years) have announced India investments; Microsoft’s and Google’s centre on cloud, AI and data centres (Business Standard, 10 Dec 2025). See recent investments.
- Tax rules now address cloud and IT services. The Finance Act 2026 exempts, subject to conditions, notified foreign cloud firms’ income from Indian data-centre services to March 2047; the 15.5% IT-services safe harbour from Budget 2026-27 is in the Income-tax Rules 2026. See tax and zones.
- Public money for compute and R&D. IndiaAI (outlay ₹10,372 crore) has onboarded more than 38,000 GPUs for start-ups and academia, and the ₹1 lakh crore RDI Scheme offers long-term finance at low or nil interest for private R&D (PIB, 25 Mar 2026).
Where the opportunity is
Foreign investors are active in six parts of the technology sector.
| Segment | What the sources say | Tag |
|---|---|---|
| IT services and BPM exports | Software services account for over 40% of India’s services exports, and software services exports grew 7.3% in FY2024-25 (RBI survey cited in the Economic Survey 2025-26). Export units can operate under the STP scheme or in IT/ITeS SEZs. | 100% automatic |
| Cloud and data centres | Microsoft’s USD 17.5 bn plan covers cloud and AI infrastructure; Google plans a gigawatt-scale data-centre campus in Visakhapatnam. Notified foreign cloud firms using Indian data centres are tax-exempt to March 2047, subject to conditions. | Tax exemption to 2047 |
| Artificial intelligence | The IndiaAI Mission (outlay ₹10,372 crore) has onboarded more than 38,000 GPUs offered to Indian start-ups and academia at affordable rates; 190 projects had been approved by March 2026 (PIB, 25 Mar 2026). | IndiaAI |
| Semiconductor design | Under the Design Linked Incentive scheme, 24 chip and SoC design projects were approved and 103 fabless firms given design infrastructure (March 2026). Semicon 2.0 design support needs Indian ownership; global firms can join as partners. | Partner model |
| Start-ups and deep tech | 212,283 start-ups were DPIIT-recognised by 31 January 2026. Startup India Fund of Funds 2.0, a ₹10,000 crore corpus approved on 14 February 2026, targets deep tech, tech-driven manufacturing and early-growth start-ups (PM India, 14 Feb 2026). | ₹10,000 crore FoF 2.0 |
| Engineering R&D and GCCs | Engineering R&D services grew 7.8% in FY2023-24 (Invest India). India hosts more than 1,700 global capability centres employing over 1.9 million professionals (FY2023-24). | See the GCC hub |
The FDI table also covers telecom and internet service providers, e-commerce (marketplace and inventory models), digital news streaming and, under the regulators page, online gaming.
Note: Investment figures from Amazon, Microsoft and Google are announced commitments, not completed investments. Amounts and periods are as reported and spending is phased.
How this guide is organised
- Recent investments: the announced commitments of Amazon, AWS, Microsoft and Google, with dates and sources.
- FDI rules: caps, routes and conditions by activity, including the land-border rule under Press Note 2 (2026) and the export-only inventory model under Press Note 3 (2026).
- Regulators and registrations: STPI, SEZ, IEC, GST, telecom authorisation, the Data Protection Board, the Online Gaming Authority and the notification for the data-centre exemption.
- Central incentives: IndiaAI, the RDI Scheme, Semicon 2.0, DLI, the start-up funds, the STP scheme, the s.140 tax holiday and the Employment Linked Incentive, with status as of 1 October 2026.
- State incentives: Tamil Nadu, Maharashtra, Uttar Pradesh, Gujarat and Andhra Pradesh.
- Tax and zones: the data-centre exemption, the IT safe harbour, significant economic presence, STP and SEZ rules, and the corporate, withholding and capital-gains rates for tax year 2026-27.
- Set-up roadmap: the ten technology-specific steps from entry decision to first export invoice, plus entry vehicles and incorporation.
- What to watch: data protection, tax presence, ownership tests and online gaming.
- Recent changes: what changed since 2025, from the equalisation levy withdrawal to Press Note 3 (2026).
- Sources: every reference the brochure cites.
What to check next
- Decide which of the six segments you are entering; the FDI route is the same, but the regulators, schemes and tax rules differ.
- If you sell cloud services into India, read the conditions of the data-centre exemption before you choose between an Indian subsidiary and an Indian reseller.
- Map the ownership chain to the beneficial owner before filing anything; a land-border owner changes the route.
- Check which schemes are still open as of 1 October 2026 on the central incentives page and the incentive tracker.
- Diary the DPDP dates: 13 November 2026 for consent managers and 13 May 2027 for core duties.