Speaking to ET Now, Agrawal, Chairman & Co-Founder, MOFSL termed the incentive a “1000-pound gorilla” decision, arguing that it addresses a critical gap in India’s participation in the global AI infrastructure boom — a wave he described as the largest infrastructure build humanity has ever seen.
“This 1000-pound gorilla, if you see what is happening in the world, we were left out in terms of the AI infra boom. This is humanity’s biggest infra build anywhere in the world. That is the data centre capex which is happening, and that data centre, you need a lot of power. I mean, it is a power guzzler,” Agrawal said.
He noted that the boom in data centres has been a major growth driver for the US economy and said India now has a unique opportunity to become globally competitive by leveraging lower infrastructure, manpower and power costs.
“But we were missing out on this particular move which is actually powering entire America in a big way. Today, America is really rocking only because of this particular boom. And now by doing this, a 22-year tax holiday — I mean, the country which has the highest competitive edge in doing a data centre, the cost of infrastructure will be lowest, cost of running people will be lowest, cost of power will be lowest,” he said.
Agrawal added that India’s ability to supply large amounts of green and conventional power could further strengthen its appeal as a data centre and AI hub.
“We will be able to provide as much green power, grey power we want. I think this particular opportunity is absolutely what was needed and this is going to be incremental growth,” he said.While estimates suggest that fresh investments of ₹30,000–50,000 crore could flow into the sector, Agrawal cautioned that the true scale of the opportunity may only become clear over time.
“Let us see. Some people are saying ₹30,000, ₹40,000, ₹50,000 crores kind of new investment can come very quickly, but God knows. In 1995, it was very difficult to figure out that India will do $250 billion of software exports, and even that is happening on the back of it. So, these are the things which you cannot say how big it will be, but this is a game-changing kind of a thing,” he said.
He stressed that the move stood out in the budget as a bold, unconventional reform with long-term implications.
“Apart from whatever other things are there in the regular way in the budget, this one was completely out of syllabus, out of box, and it will have far-reaching impact — maybe not in six months, but as we go forward, I think this is going to be a game-changing thing. It can actually change the outlook for the country, outlook for the markets,” Agrawal said.
He also pointed to a shift in investor perception, noting that India had previously been seen as lacking a clear AI investment story.
“Markets were disappointed that India does not have any AI play. Now, we are right there. So, it is going to be a big thing,” he added.
However, Agrawal also flagged concerns around the recent hike in Securities Transaction Tax (STT) on futures and options, warning that it could act as a drag on market liquidity and brokerage sector growth.
“The intention of the regulators or the policymakers or lawmakers in Delhi is very clear — they have been trying to curb this speculation,” he said, referring to earlier changes such as the conversion of weekly derivative contracts into monthly ones in November 2024.
“That was the first one for which we are suffering for the last four quarters. If you see all the brokerages, the earnings are down by 25–30% year on year because of that,” he said.
Agrawal noted that just as the sector was beginning to recover, the fresh STT hike could create another headwind for high-frequency and arbitrage trading strategies.
“Now just about we are coming out of that particular kind of a headwind, and now we have a fresh new headwind where the F&O and option contracts will become far more unremunerative for the high-frequency traders, and that will suck the liquidity out of the market,” he said.
While the full impact remains uncertain, Agrawal expects growth in the broking space to remain subdued for the near term.
“How many trades will become unviable, I do not know, but definitely it is a headwind. Only time will tell how badly we get impacted, but another four quarters will remain in slow land in terms of growth. Maybe after this Q4, I was thinking we will again go to 25% kind of growth. Now, I think that may not happen,” he said.
Overall, while the STT hike may weigh on near-term market activity, Agrawal believes the data centre tax holiday could prove to be one of the most consequential structural reforms in recent years — potentially positioning India as a serious global player in AI infrastructure over the coming decades.
