Andhra Pradesh Chief Minister N. Chandrababu Naidu is seeking significant changes to central laws to attract investment in data cities and boost the artificial intelligence (AI) sector in the state. Naidu has urged the central government to consider amendments to the Income Tax Act and the Copyright Act to create a more favorable environment for foreign cloud service providers (CSPs) and AI innovation. He also proposed tax exemptions for tier-3 cities to encourage broader economic development.

Naidu highlighted that the current Income Tax Act may unintentionally discourage foreign CSPs from investing in India. According to him, the classification of these providers as Permanent Establishments (PEs) increases their tax burden, making India less competitive compared to countries like Singapore, which offer more transparent and favorable tax regimes. To address this, Naidu suggested amending Section 9(1)(i) of the Income Tax Act to clarify that "Indian data center affiliates do not create a permanent establishment for foreign cloud service providers." He believes that this change would reduce litigation risks and enhance India's attractiveness as a global investment destination.

Andhra Pradesh is actively planning to develop a Data City in Visakhapatnam, with Google expected to be one of the anchor investors. Naidu has also sought central support for developing a robust IT ecosystem in both Visakhapatnam and Amaravati, the state's capital. This includes investments in digital infrastructure, skill development programs, and research and development initiatives.

In addition to tax reforms, Naidu has proposed an amendment to Section 52 of the Copyright Act. This amendment aims to address the challenges related to copyright law in the context of AI model training. The current copyright laws may create obstacles for AI companies seeking to use copyrighted material for training their models. Naidu believes that clarifying the legal framework around this issue would encourage AI innovation and attract more AI-related investments to Andhra Pradesh.

Naidu's push for legal and regulatory changes aligns with his broader vision of transforming Andhra Pradesh into a leading technology hub. He has emphasized the importance of embracing new technologies like AI, data analytics, and cloud computing to drive economic growth and create employment opportunities for the state's youth.

The development of the Data City in Visakhapatnam is a key component of this vision. The 500-acre project aims to provide state-of-the-art infrastructure for data centers, AI hubs, and IT companies. The government has already begun acquiring land for the project and has plans to allocate significant portions to major players like Google and Tata Consultancy Services (TCS). The Data City is modeled after Hyderabad's successful HITEC City, which Naidu himself pioneered during his previous tenure as Chief Minister.

Furthermore, Naidu is keen on developing IT ecosystem in Visakhapatnam and Amaravati. This involves attracting investments in digital infrastructure, promoting skill development, and fostering collaboration between industry, academia, and government. He believes that by creating a conducive environment for innovation and entrepreneurship, Andhra Pradesh can emerge as a preferred destination for tech companies and talent.

Naidu's efforts to boost the AI and data sectors in Andhra Pradesh extend beyond legislative and infrastructure initiatives. He has actively engaged with global tech leaders, inviting them to invest in the state and collaborate on various projects. He has also emphasized the importance of promoting STEM education and providing training programs to equip the state's youth with the skills needed to succeed in the digital economy. By focusing on both the supply and demand sides of the equation, Naidu aims to create a sustainable and thriving tech ecosystem in Andhra Pradesh.