Andhra Pradesh CM Chandrababu Naidu Proposes Key Amendments to Central Laws
Andhra Pradesh Chief Minister N Chandrababu Naidu has urged the central government to amend several laws to better support the growth of data cities, AI innovation, and provide tax benefits to tier-3 cities. His proposals focus on easing investment barriers, updating copyright provisions, and encouraging remote work infrastructure.
Reforming Tax Laws to Attract Foreign Cloud Service Providers
Naidu highlighted that the current Income Tax Act’s classification of foreign Cloud Service Providers (CSPs) as Permanent Establishments (PEs) creates a higher tax burden, discouraging investment in India. He pointed out that countries such as Singapore offer clearer and more favorable tax treatments, which attract global players.
To address this, Naidu suggested amending Section 9(1)(i) of the Income Tax Act to explicitly state that Indian data centre affiliates do not constitute a permanent establishment for foreign CSPs. This change aims to reduce litigation risks and enhance India's competitive edge in the global cloud services market.
Developing Data Cities and IT Ecosystems in Andhra Pradesh
The state plans to establish a Data City in Visakhapatnam, with Google identified as a key anchor investor. Naidu has requested central assistance for this project as well as for expanding IT ecosystems in Visakhapatnam and Amaravati, positioning Andhra Pradesh as a hub for technology and data-driven enterprises.
Updating Copyright Law for AI and Text-Data Mining
Naidu also addressed limitations in the Copyright Act, particularly the absence of provisions for text-and-data mining critical for training AI models on publicly available datasets. He contrasted India's position with countries like Singapore and Japan, which provide explicit legal clarity in this area.
He proposed amending Section 52 of the Copyright Act to introduce exemptions for text-and-data mining related to AI development. This would allow innovation while safeguarding intellectual property rights.
Tax Incentives for Tier-3 Cities to Support Remote Work
To promote co-working spaces and remote working in smaller cities and rural areas, Naidu suggested extending income tax exemptions to tier-3 locations. Andhra Pradesh has already launched policies targeting Electronics Manufacturing, Semiconductor and Display Fab, IT and Global Capability Centres, and Data Centres.
He urged the central government to back these initiatives through legislative changes and tax benefits, which would help attract investment and ease financial pressures on the state.
Strategic Importance of These Amendments
Naidu’s proposals come at a time when global competition for technology investments is intensifying. Aligning India’s regulatory framework with international standards is essential to encourage foreign investment and foster growth in AI and data sectors.
For legal professionals working in technology, tax, and intellectual property, these proposed amendments could significantly impact compliance strategies and investment planning in the near future.
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