India’s Cloud Push Helps CIOs, but Unchecked Developer Usage Can Inflate Costs: Nutanix CTO

The Union Budget 2026 proposed a tax holiday until 2047 for foreign cloud service providers that host global workloads from India-based data centres, part of a broader effort to anchor AI and hyperscale computing capacity within the country. 

Presenting the Budget, Finance Minister Nirmala Sitharaman had said, “Recognising the need to enable critical infrastructure and boost investment in data centres, I propose to provide tax holiday till 2047 to any foreign company that provides cloud services to customers globally by using data centre services from India. It will, however, need to provide services to Indian customers through an Indian reseller entity.”

FE FUTECH speaks with Daryush Ashjari, CTO (APJ), Nutanix, a major cloud operating platform, on what the budget proposal means for Indian CIOs.    

What’s your first reaction to the announcement in the Union Budget for FY26-27 proposing a tax holiday (up to 2047) for foreign cloud service companies that use data centres located in India to serve global customers?

It's good news because it's extending the choice that's available for the CIOs in order to build a flexible environment. However, flexibility is a double-edged sword. It gives you a choice, but if the choice is wrong, or there are too many choices, it leads to unprecedented complexity and cost.

From a network, infrastructure and compute architecture perspective, with modernization and AI, the companies no longer have the choice to do everything in-house. Even the very large enterprises don't have the capability to train the large language models by themselves. They need to seek the services of the hyperscalers, in order to use their compute, data storage capabilities, to select, train and tune the model. Followed by employing the additional sources, capabilities or choices. 

For example, in case of a distributor organization, such as a supermarket in retail or a bank in BFSI, where does it make sense for them to run AI inference workloads - at the edge, at the branch, or at the central data centre or take it to the cloud? So the proposed tax holiday is welcome news, because it gives additional choice.

How do you see it from the lens of the CTO, CIO community? 

The budget proposal for the tax holiday gives CIOs more freedom for a period of time. Instead of being restricted by strict mandates and regulations, they have greater flexibility in how they build their infrastructure. The CIOs, CTOs can design hybrid and multi-cloud environments without being tightly constrained. And today, regardless of industry, no organisation can operate as a closed fortress. Infrastructure must be open and connected. 

In India especially, recent developments have created an additional layer of flexibility, at least temporarily. At the same time, flexibility comes with responsibility. More regulations usually reduce a CIO’s room to manoeuvre, but too much choice creates another problem — complexity. If too many technologies are adopted, CIOs will have to pay the price in operational complexity, duplicated infrastructure, and higher maintenance costs. Every CIO today is dealing with this balance. The challenge is that managing AI and cloud environments requires new skills. Each cloud provider is different. 

For example, Azure’s services differ from AWS in tooling, APIs and operational models. Every platform comes with its own ‘skill tax’ — meaning teams must learn new tools, processes, and compliance models. As hybrid and multi-cloud environments grow more complex, this skill tax can become unsustainable. Thus central governance and a unified management framework is critical. Regardless of where software, compute, networking, or storage come from, organisations need consistent tools, policies, and skill sets to manage everything efficiently and securely.

What will be the kind of cost impact that this tax holiday will bring for the CTOs in India ?

Skill gap is a major challenge that CIOs will face after subscribing to additional services around the cloud. The skillsets built over decades to manage the compute, network, storage, and cyber security architecture for on-prem are no longer capable of being applied to cloud management. As a result, the infrastructure management for the cloud becomes taxing and unsustainable over a period of time.

Rarely have I met a CIO whose budget has increased over the previous year, so they have to manage more with less. Additionally, the interconnected microservice capability of the cloud providers is very enticing to the developers and the IT teams. But these additional capabilities come at a cost, and at times, not always visible to the CFO and CIO. In the absence of proper monitoring and governance around it, the cloud bill will get bigger. 

CIOs will have to set boundaries around various features offered in the cloud. Enterprises should begin with the minimum requirements. If the operational and development teams are given full liberty, the additional capabilities will swell the cloud bill.

But the tax holiday announced by the government will reduce the overall cloud usage cost because they will now be offered from the Indian geographical region. So the cost will come down, right?

The cost will come down but for how long they will remain stable. It's kind of a honeymoon period. There's enticement to leverage from the tax holiday. But ultimately, once dependencies are built, is there a point of reversal ?

I understand the tax holiday is until 2047. However in terms of prices, a year is like a century in other organisations and industries. Every current decision impacts the trajectory and the direction for the next year. Although the tax holiday is a welcome move and encourages organizations to be more agile and leverage cloud infrastructure better, CIOs will have to keep their eyes open and ensure the keys to the candy store are not given to the kids giving them liberty to eat as much as they can.