Crossing the milestones of sustainability, resilience, policy coherence, and capacity expansion will determine whether India can transform into a global hub for digital infrastructure, writes Manish Pant.
An important cornerstone in India’s ambition to become a developed nation by 2047 is the creation of a robust digital public infrastructure backbone. And the world’s fastest‑growing major economy is furiously building it. From Aadhaar to FASTag, digital platforms now shape the everyday lives of 1.4 billion citizens. Powering these systems are data centres: vast repositories of information driving India’s digital future. But the national ambition doesn’t end there. The country is also positioning itself as a global digital infrastructure hub, aiming to capture demand from surging AI adoption, hyperscale cloud expansion, and enterprise digitalisation.
India’s data centre capacity, though modest compared with developed economies, has surged from around 0.45 gigawatt (GW) in March 2020 to around 1.6 GW by March 2026. Anand Kulkarni, Director at ratings agency, Crisil Ratings, tells INFRASTRUCTURE TODAY, “Digitisation and digitalisation by enterprises have been the key drivers of this growth. The Covid‑19 pandemic accelerated digitisation, as businesses converted physical information into digital form, while digitalisation has enabled companies to automate their business processes and unlock new efficiencies.” The next step involves hyperscaling, or the creation of facilities capable of smoothly fulfilling the ever-growing demand for compute, memory, networking, and storage resources.
Thus, this ambition is already translating into capacity growth. Union Minister for Electronics & IT, Ashwini Vaishnaw, highlighted the scale of commitment on the sidelines of the India Impact AI Summit held in February this year. “India has already secured over $70 billion worth of investments in AI data centres, with another $90 billion announced. This scale of commitment positions India among the leading global destinations for AI workloads and sovereign cloud infrastructure.” He added that the long‑term policy framework, comprising a tax holiday up to 2047, gives investors certainty and confidence.
Crisil Ratings projects that the rapid growth of India’s data centre industry will lead to capital expenditure of ₹550-650 billion over fiscal years 2026-28, primarily towards land acquisition, power infrastructure, cooling systems, and advanced equipment. “The infrastructure status given to data centres has improved access to long‑term institutional financing, which is an important aspect given the capital‑intensive nature of the industry. Policies in some states offering incentives on land, power tariffs, and stamp duty have accelerated site selection and investment decisions. The Digital Personal Data Protection (DPDP) Act, 2023, reinforces data localisation norms, further strengthening the domestic demand case,” explains Kulkarni.
According to the consultancy PwC India, the country’s bid to host global AI and cloud workloads could unlock $25 billion in annual forex revenues by the early 2030s. The demand drivers are structural rather than cyclical. India’s large population, widespread internet penetration, and rising data consumption—averaging over 25 GB per subscriber per month with around 1 billion users—have created a massive demand base. Over-the-top (OTT) platforms, social media, digital payments, and enterprise automation are further propelling this demand.
Shrinivas Rao, CEO at the real estate services firm, Vestian India, provides a buoyant outlook. “Structural demand drivers and a robust supply pipeline are underpinning a sustained multi‑year expansion cycle. Capacity is projected to reach 4-5 GW by 2030. Large hyperscale platforms and joint ventures, including Google-AdaniConnex, Reliance‑backed Digital Connexion, and STT GDC, have announced investments of around $60-70 billion over the next five years, catalysing large, campus‑scale developments across key markets and reinforcing confidence in India’s emergence as a scalable digital infrastructure hub.”
Kim Collaco, Partner at the advisory Baker Tilly ASA India, frames India’s role in global digital infrastructure. “India is evolving from being a large digital‑consumption market to becoming a core part of global digital infrastructure. The main drivers for this are rapid cloud adoption, AI workloads, 5G rollout, digital public infrastructure, data‑localisation expectations, and a very large enterprise base moving from on‑premises systems to cloud and hybrid architecture.” She says the next decade will be shaped by hyperscale AI, regulatory and business continuity requirements to keep more data storage and processing, and increasingly high‑density compute for AI workloads closer to Indian users and state‑level competition. “Maharashtra, Tamil Nadu, Telangana, Uttar Pradesh, Andhra Pradesh, and now Gujarat, will improve incentives, land availability and approval timelines. From an investor’s lens, India offers demand depth, policy momentum and cost competitiveness.” As a combination of these factors drives growth, a bullish Union Minister Vaishnaw sees only one way forward: “India will be among the top destinations for AI workloads and sovereign cloud infrastructure.”
Scaling ambition
The surge in demand, coupled with enabling policies, has created fertile ground for industry leaders to seize the opportunity. The scale of commitments now being announced signals how India is positioning itself as a global hub for digital infrastructure. In October 2025, Google announced plans for a gigawatt‑scale AI hub in Visakhapatnam (Andhra Pradesh), partnering with Adani Group’s AdaniConneX joint venture, with Bharti Airtel providing ecosystem support through connectivity and infrastructure collaboration. Earlier that year, Tokyo‑headquartered NTT DATA rolled out a series of strategic initiatives in India, including the commissioning of its 8,100‑km Malaysia-India-Singapore Transit (MIST) submarine cable system, capable of carrying over 200 terabits per second, strengthening the market’s role in global connectivity. The company, a subsidiary of NTT Group, is currently hiring for hundreds of technical and operations roles.
NTT DATA has also established its largest data centre campus in India. “India is key in our global strategy, fuelled by its rapid economic and digital expansion.… Currently, India is one of our top ten revenue‑generating markets,” a company statement quoted Akira Shimada, President & CEO, as saying. “We are investing ¥8 trillion ($59 billion) globally over five years from FY2023 to FY2027 into growth areas, including data centres and AI. We are committed to delivering our integrated full‑stack proposition to our clients across data centres, network, applications, BPaaS (business process as a service), managed services, cloud, security, and AI solutions.” These examples show how global players are embedding long‑term strategies in India’s digital infrastructure landscape.
Domestic firms are simultaneously looking to maximise the opportunity. Gopal Vittal, Executive Vice Chairman, Bharti Airtel, captured the ambition during FY2026 fourth‑quarter earnings call for Bharti Airtel Ltd and Bharti Hexacom in March. “To capitalise on the growth opportunities, we are focusing on three key areas. First is to build gold‑standard infrastructure with low‑latency fibre networks, deeper subsea cable presence across the globe, augment DC‑to‑DC connectivity and expand our OPGW (optical ground wire) infrastructure. Over the last three years, we have deployed over 143,000 km of fibre, and we believe the pace of deployment should continue to address the growing customer needs as well as future‑proofing Airtel itself.” In March, Bharti Airtel announced a $1 billion investment in its data centre arm Nxtra Data Ltd by Alpha Wave Global, Carlyle, and Anchorage Capital.
Alongside capacity expansion, Nxtra is embedding AI-driven operations—encompassing predictive analytics and automated cooling systems—to enhance efficiency and lower costs. By combining hyperscale campuses with edge facilities, it ensures the low-latency delivery of workloads across India, a critical requirement as enterprises migrate to cloud and AI platforms. Standalone, compact computing sites located close to end-users constitute edge facilities.
Hyderabad‑based CtrlS Datacenters, Asia’s largest Rated‑4 provider, has been a pioneer in India’s data centre industry and continues to develop new hyperscale parks. Anil Nama, Chief Information Officer, outlines the company’s confidence in scaling from 370 MW today to nearly 2 GW by 2030 through a balanced core‑to‑edge model. “We are investing in large hyperscale campuses and AI‑ready infrastructure that support high‑density workloads and future scalability. At the same time, we are expanding our edge presence to enable low‑latency, distributed digital services closer to end‑users.” Tier-2 and 3 markets form a critical part of this roadmap. “We currently run edge datacentres in cities like Patna and Lucknow, with plans to expand to regional hubs such as Bhubaneswar, Guwahati, Bhopal, Kochi, and GIFT City,” Nama adds. This aligns with the company’s broader goal of establishing over 20 edge datacentres across the country, ensuring that hyperscale growth is matched by distributed reach.
Meanwhile, technology providers such as Delta Electronics are ensuring that this rapid expansion is underpinned by efficiency and resilience. The company’s proprietary InfraSuite portfolio of data centre infrastructure solutions offers modular power management, precision cooling, and monitoring systems tailored for high‑density workloads. Looking ahead, Pankaj Singh, Business Head Data Centre Segment, Delta Electronics India, points to three clear growth vectors. “Tier-2 and Tier-3 cities are going to be the next frontier, as latency-sensitive applications like AI inference, edge computing, and 5G-enabled services proliferate, data processing needs to move closer to the user. That creates massive demand for distributed, smaller-footprint facilities.” At the same time, Singh stresses that AI and graphics processing unit (GPU)‑dense computing are fundamentally reshaping power density requirements. “Racks that were once 5-10 kW are now scaling to 30-100 kW. That’s a game‑changer for power and cooling infrastructure,” he says. The third vector is the rise of green data centres, buoyed by enterprise environmental, social and governance (ESG) commitments and regulatory nudges, with customers seeking infrastructure that is both powerful and verifiably efficient.
Construction players are also eyeing the opportunity. Ernakulum based U Sphere, backed by the century long legacy of the Uralungal Labour Contract Co operative Society (ULCCS), is positioning itself as a turnkey engineering, procurement and construction (EPC) provider for hyperscale and AI ready facilities. “Modern data centres require steel intensive structures, accelerated construction timelines, integrated MEP (mechanical, electrical and plumbing) systems, and operational resilience. This aligns strongly with our 3S philosophy of speed build, smart build, and sustain build,” says Biju Mahima, CEO.
By far, Maharashtra, Tamil Nadu, Karnataka, Telangana, and Uttar Pradesh have together commanded over 80 per cent of the nation’s live capacity, powered by submarine cable landings, deep IT ecosystems, and aggressive state incentives. Now, states like Chhattisgarh are racing to catch up. The landlocked state is offering a comprehensive incentive framework under its Industrial Development Policy 2024‑30 in its bid to become a Tier‑2 leader. Prabhat Malik, Director Industries, declares, “Chhattisgarh’s decision to prioritise data centres is rooted in a strong alignment between the sector’s core requirements—high uptime, low latency, scalable infrastructure, and long‑term operational reliability—and the state’s on‑ground strengths.” The policy provides capital subsidies of up to 35 per cent, reimbursement of State Goods and Services Tax (SGST), electricity duty exemptions, and employment‑linked incentives. AI data centres qualify for a 50 per cent capital subsidy, signalling the government’s focus on next‑generation workloads.
With over 26,000 MW of installed power capacity, negligible outages, and competitive tariffs, the state is positioning itself as a reliable and cost‑effective hub. Malik adds, “Geographically, Chhattisgarh’s central location, bordering seven states, enables efficient traffic routing, balanced load distribution, and low‑latency data movement across India. From this location, data centres in the state can potentially serve over 600 million users across surrounding regions.” One of the flagship projects is RackBank’s upcoming 80 MW AI data centre park in Nava Raipur, billed as India’s first dedicated AI campus.
India’s data centre industry is expected to attract $20-30 billion in investments by 2030, while AI‑specific commitments already total around $160 billion. Global Big Tech hyperscalers, such as Google, Amazon, and Microsoft, are already committing billions, while domestic operators and technology providers are scaling to meet demand. The conversation is no longer about whether India can build capacity; it is about how quickly the country can scale, diversify across Tier-2 markets, and, most importantly, integrate sustainability into its growth model.
Critical resources
India’s data centre sector is booming, but sustaining this growth requires confronting a set of systemic challenges that are as formidable as the opportunities. Power, water, and land are the three pillars on which the industry rests, and each presents constraints that could slow momentum if not addressed quickly.
Power is the most pressing challenge. Data centres are energy‑intensive, and the rise of AI workloads has only magnified demand. Crisil Ratings’ Kulkarni observes, “Data centres are power‑intensive and require reliable power for their continuous operations and uptime requirement. Hence, securing reliable power at competitive tariffs is a critical operational requirement for this sector. Round‑the‑clock renewable power availability will help address environmental concerns related to power consumption for customers.” The government has expanded installed capacity from 383.5 GW in FY2021 to 475.2 GW in FY2025, with renewables contributing 46 per cent. However, the challenge lies in ensuring grid readiness and redundancy for AI‑ready campuses.
Analysts warn data centres could consume close to 3 per cent of national electricity by 2030. Without firm power and bankable renewable procurement, India’s ambitions could falter. CleanMax Enviro Energy Solutions—one of the largest renewable energy providers to commercial and industrial customers—has positioned itself as a partner to the sector. Its leadership stresses that hyperscaler demand for round‑the‑clock renewable power is reshaping procurement models. The company has partnerships with leading global technology companies, including Google, Meta, Amazon, and Apple, alongside major data centre operators such as Equinix, ST Telemedia Global Data Centres, and Iron Mountain Data Centers among others. Maintains Kuldeep Jain, Founder & Managing Director, “A key recent milestone was Apple’s partnership with CleanMax to support the development of
over 150 MW of renewable energy capacity in India through an initial `1 billion investment initiative. As AI-led infrastructure significantly increases energy intensity across data
centres, access to reliable and scalable renewable energy is becoming increasingly strategic for hyperscalers.”
Water is the second critical constraint. High‑density campuses require cooling solutions that consume significant volumes of water. Baker Tilley’s Collaco stresses that cooling efficiency and water reuse are now decisive factors in site selection. Global environmental services company Veolia highlights the importance of efficient circular solutions for both microelectronics and data centres. Guillaume Dourdin, CEO, Veolia India, notes, “For data centres, the challenge is even greater, because they consume huge volumes of both water and energy. There will be a strong need for advanced recycling technologies, heat recovery, renewable energy integration, and long‑term operational excellence.”
Turbashu Bhattacharya, Director, Roserve Enviro, a homegrown specialist in industrial water treatment, is vocal about the need for innovation in how data centres manage water. He also points out that liquid cooling and hybrid systems are increasingly essential to handle AI‑driven power densities, while water sustainability should be embedded into the design stage rather than treated as a compliance requirement after construction. “Data centres must adopt advanced wastewater recycling technologies to ensure that cooling requirements do not compete with community water needs.”
Land is the third challenge, and it is closely tied to approvals and regulatory clarity. Kulkarni points out, “This is related to receipt of timely approvals for land acquisition, environmental clearances and power connectivity.” Delays in land conversion, building permissions, and right‑of‑way approvals create financing uncertainty and slow project timelines. Vestian’s Rao adds that last‑mile infrastructure, such as fibre connectivity and transport access, remains a bottleneck, particularly in emerging Tier-2 markets.
State governments are attempting to address these issues through single‑window clearances and incentive frameworks, but execution remains uneven. Collaco argues that harmonisation of approvals is critical. “Land conversion, building permissions, environmental clearances, right‑of‑way, electricity connectivity and telecom approvals still sit across multiple authorities. That creates avoidable delays and financing uncertainty.” Without streamlined processes, India risks losing momentum to competing markets in Southeast Asia.
Beyond these structural challenges, the entry of hyperscalers introduces its own set of pressures. Companies such as Google, Amazon, and Microsoft are both the largest opportunity and the toughest counterparty for third‑party operators. This dynamic creates margin pressure for colocation providers, particularly in bulk deployments. Crisil projects hyperscalers could account for up to 80 per cent of contracted capacity by 2030.
Observes Rao, “The growing trend of hyperscalers developing captive data centre capacity is likely to divert a share of demand away from the wholesale colocation market, potentially moderating absorption levels for third‑party operators over the medium term.” Yet, he also reiterates that third‑party
operators will continue to play a critical role in offering flexibility, faster time‑to‑market, and multi‑cloud environments.
Collaco attempts to strike a balance. “Hyperscalers are both the largest opportunity and the toughest counterparty for third‑party operators. They bring anchor demand, global standards and bankability, but they also negotiate aggressively on pricing, power efficiency, uptime obligations and expansion rights.” She urges that policymakers must ensure fair grid access, transparent incentives, and non‑discriminatory fibre and power infrastructure to maintain a level playing field.
Industry voices such as Roserve Enviro’s Bhattacharya caution that sustainability must not be compromised in the race to meet hyperscaler demand. “A single hyperscale data centre can consume nearly 3-5 million litres of water per day for cooling, equivalent to the daily water needs of a town of 30,000-50,000 people. At the same time, NITI Aayog has projected that 21 major Indian cities could face severe groundwater stress, impacting nearly 100 million people.” With water stewardship directly linked to operational resilience and the industry’s social licence to operate, Bhattacharya sees an opportunity for the sector to take the lead in embedding responsible conservation practices early on.
Enduring expansion
India’s data centre sector has reached a stage where sustaining growth is no longer about capacity alone. The next decade will hinge on how effectively policy coherence, funding accessibility, and industry innovation converge to build a resilient ecosystem, with solutions that are systemic and forward‑looking rather than treated as afterthoughts. Rao sees the next phase unfolding beyond the metros. “As core markets such as Mumbai and Chennai mature, operators are increasingly targeting emerging cities to meet regional demand. This shift is driven by the need to reduce latency, enable faster data processing closer to end users, and build a more distributed digital infrastructure.” Rising digital penetration across Tier‑2 and 3 markets is amplifying localised demand for cloud, OTT, gaming, and enterprise workloads, making in‑city interconnection critical for performance and reliability.
Collaco identifies the challenge in terms of execution discipline. “Data centres are power‑intensive, water‑sensitive and approval‑heavy assets. If India wants
sustained long‑term growth, the priority must be reliable, competitively priced, green power. AI‑ready campuses need firm power, grid redundancy, open access clarity and bankable renewable procurement.” She calls for integrating water and cooling into design. “The shift to liquid cooling, wastewater reuse and rainwater harvesting must become standard for large campuses.”
Industry players are already offering solutions. Citing their business model, CleanMax’s Jain affirms that hybrid renewable models combining solar and wind are essential to meet round‑the‑clock demand from hyperscaler campuses. “Our diversified portfolio across solar, wind, and hybrid solutions allows us to support the evolving energy requirements of digital infrastructure. We also benefit from long-tenure PPAs (power purchase agreements) of nearly 20-25 years, strong execution capabilities, and an established presence across key industrial and technology markets in India.” On water, Bhattacharya advocates a circular‑economy approach where treated wastewater, advanced recycling, and decentralised reuse become integral to operations. “The future of data centre sustainability will depend not only on energy efficiency, but equally on water efficiency. Technologies such as tertiary treatment, zero liquid discharge, and real‑time monitoring can sharply reduce freshwater dependency while ensuring reliability.” He calls for a mindset shift, with water acknowledged as a strategic resource rather than a mere utility.
Funding accessibility is the second pillar of long‑term growth. Kulkarni believes that funding is unlikely to be a challenge. “Incumbents have built capacities through sizeable equity funding in the past. Post‑commissioning, these operational capacities have generated steady cash flows, helping fund equity requirements of subsequent developers. Moreover, such incumbents are well placed to tap primary markets for raising equity to fund growth.” He notes that debt financing is supported by long‑term contracted revenues with strong counterparties, providing cash flow visibility and enabling tenures of 10-12 years.
Collaco is more nuanced, cautioning that timing remains critical. “Land, power infrastructure, cooling and imported equipment require upfront capital, while revenues ramp only after fit‑out, customer contracting and utilisation. Smaller operators without strong sponsors may struggle with debt service, currency exposure and delayed approvals.” The solution lies in innovative financing structures. Infrastructure funds, strategic capital, InvIT‑like vehicles, and green financing can provide diversified sources of capital. Lenders will reward operators who demonstrate discipline, sustainability, and strong tenant quality.
Rao reinforces that foreign institutional investors remain committed despite geopolitical headwinds. “While geopolitical uncertainty may introduce short‑term caution in capital deployment, it is unlikely to derail the sector’s long‑term growth trajectory. India’s data centre expansion is powered by strong domestic demand, rapid digitalisation, data localisation requirements, and sustained cloud adoption, which provide structural resilience beyond external factors.” Investor confidence is anchored in India’s domestic fundamentals, not just global capital flows.
Amid formidable challenges, India remains determined to claim a sizeable share of the global digital infrastructure market. International consultancy McKinsey & Co. estimates data centre capacity will nearly double to 200 GW by 2030, up from 100 GW in 2025. Bharti Airtel’s Vittal suitably captured this ambition during the March earnings call. “Despite the investments we have put in, we aren’t a big player in the data centre market. We are only at about 10-12 per cent share, and for a company of our size, we are not satisfied with that kind of presence. So, we really need to step up our game in data centers and our ambition is to get to a gigawatt as we mentioned in a few years’ time, but that game will not end there, we will continue to build out!”
That hunger for expansion is not just Airtel’s; it is also India’s, as the nation races to stake its claim in the emerging global digital order.