India is increasingly being viewed as a destination where the infrastructure powering cloud computing, artificial intelligence (AI) and the broader digital economy can be built at scale.
Individually, these are major investment announcements. Collectively, they point to a fundamental shift in India’s role within the global technology ecosystem.
Where India stands globally
According to Statista, India had 296 data centres as of April 2026, making it the world’s sixth-largest data-centre market by number of facilities, behind the United States (4,184), the United Kingdom (515), Germany (514), China (369) and France (345).
At first glance, that appears impressive. But counting data centres is a little like counting factories. The number of facilities tells you how many buildings exist, not how much work they can handle. In the data-centre industry, the more meaningful measure is capacity.
Data-centre capacity is measured in megawatts (MW), which refers to the amount of electrical power a facility is designed to draw and use for servers, storage systems, networking equipment, cooling infrastructure and, increasingly, AI accelerators such as GPUs.
In simple terms, it indicates how much computing equipment a country’s data centres can support.
This means two countries may have a similar number of data centres but vastly different computing capabilities. A country with fewer but larger facilities can often support more servers, process more data and run larger AI workloads than a country with a greater number of smaller sites.
This is where India’s growth becomes more significant. According to the Ministry of Electronics and Information Technology (MeitY), India’s installed data-centre capacity increased from around 375 MW in 2020 to nearly 1,500 MW (1.5 GW) in 2025.
More recent estimates from Cushman & Wakefield’s Global Data Centre Market Comparison 2026 suggest India’s operational capacity has already crossed 1.6 GW. That makes India the second-largest operational data-centre market in the Asia-Pacific region.
Why capacity matters more in the AI era
The surge in data-centre investment cannot be understood without understanding what AI has done to computing demand.
Traditional cloud infrastructure primarily supported websites, enterprise software, video streaming and online storage. AI infrastructure is fundamentally different.
Training and operating large language models require massive computing clusters powered by thousands of GPUs. These systems consume significantly more power than conventional cloud workloads and generate far more heat, requiring advanced cooling systems and specialised infrastructure.
This is one reason industry observers increasingly describe AI as an infrastructure race rather than merely a software race.
The shift is already visible in India.
Under the IndiaAI Mission, the government has onboarded more than 38,000 GPUs through empanelled service providers and data-centre operators. According to the government, these resources are being made available at roughly one-third of prevailing global costs.
In other words, India is not simply trying to become a consumer of AI technologies. It is actively building the computing infrastructure required to develop, train and deploy them.
A geographical advantage few countries can replicate
One reason India is attracting data-centre investments is geography.
The country sits at the intersection of Europe, the Middle East and Southeast Asia, making it strategically important for global internet connectivity. Modern digital infrastructure depends heavily on submarine cable systems that carry nearly all international internet traffic.
Historically, Mumbai has dominated India’s data-centre landscape because of its concentration of submarine cable landing stations and strong connectivity to international networks.
According to Cushman & Wakefield, Mumbai remains India’s primary data-centre market and is expected to cross 1 GW of operational capacity by the end of 2026. The city is also among the fastest-growing data-centre markets in Asia-Pacific.
However, the next phase of growth is increasingly shifting beyond Mumbai.
Hyderabad, Chennai, Pune, Delhi-NCR and Bengaluru are emerging as major secondary markets, while cities such as Visakhapatnam are positioning themselves as future AI infrastructure hubs.
Google’s Visakhapatnam project reflects this trend. The company is not merely building a data centre. It is establishing an AI hub alongside the America-India Connect initiative, which will bring multiple international subsea cable landings to India’s eastern coast.
Power is becoming the new oil
If geography explains where data centres are built, power explains whether they can be built at all.
Globally, access to electricity has become one of the biggest constraints facing the data-centre industry. AI has dramatically increased power requirements, with training large models requiring thousands of high-performance chips operating simultaneously for extended periods.
According to Cushman & Wakefield, power availability is increasingly becoming one of the most important determinants of future competitiveness among data-centre markets.
India’s position here is stronger than many realise. The country ranked fourth globally in electricity-production growth between 2022 and 2025, according to the report. At the same time, it continues to expand renewable-energy generation at scale.
This is one reason projects such as Reliance’s Jamnagar campus have attracted global attention. According to Reuters, the Meta-Reliance partnership benefits from Jamnagar’s access to power, water and infrastructure, while also drawing on Reliance’s renewable-energy ecosystem.
In the AI era, abundant and reliable power may become India’s most valuable infrastructure asset.
Data sovereignty is becoming a business driver
AI may be driving the latest investment cycle, but regulation is providing another powerful tailwind.
The Digital Personal Data Protection (DPDP) Act, 2023 does not mandate blanket localisation of all personal data. However, it gives the government the ability to regulate cross-border transfers and places greater emphasis on data governance and accountability.
According to KPMG’s report India’s Data Centre Revolution: Powering the Trillion-Dollar Digital Dream, sector-specific requirements have already encouraged domestic storage of certain categories of information. The Reserve Bank of India’s payment-data localisation rules are a prominent example.
Domestic players such as Yotta Data Services, CtrlS, Sify Infinit Spaces, Nxtra by Airtel and AdaniConneX are rapidly expanding their footprints as demand for cloud and AI infrastructure grows.
Yotta has built one of Asia’s largest data-centre campuses in Navi Mumbai, while Sify, CtrlS and Nxtra are scaling capacity across multiple cities.
In a move supporting data localisation, the government’s BHASHINI language AI platform migrated from a global hyperscaler to Yotta’s Government Community Cloud and Shakti Cloud.
For global technology firms, the direction is increasingly clear. Hosting data within India helps address compliance requirements, reduce latency and improve resilience.
As a result, data centres are increasingly becoming regulatory assets as much as technology assets.
Budget 2026 strengthened India’s data-centre case
Union Budget 2026 may prove to be one of the most consequential budgets for the sector.
According to KPMG, the government has adopted an infrastructure-led approach focused on AI, semiconductors, cloud sovereignty and digital infrastructure. The Budget also introduced measures aimed at encouraging cloud infrastructure investments and strengthening India’s position as a global data hub.
One of the most significant proposals is a tax holiday until 2047 for foreign cloud providers that utilise Indian data centres and local resellers.
KPMG describes the move as part of a broader strategy to localise international data traffic and create a long-term growth cycle for domestic digital infrastructure.
The broader message is clear: India is no longer viewing data centres as real-estate projects. It is increasingly treating them as strategic infrastructure.
The Budget also introduced a Safe Harbour provision aimed at attracting more international cloud and AI companies to India. By reducing tax uncertainty, the government is making India a more attractive destination for global cloud and AI workloads.
Why global capital is flowing into India
The investments announced over the past year reveal the scale of the opportunity.
Google’s Visakhapatnam AI Hub represents a $15 billion commitment. AirTrunk has proposed investments worth Rs 3 lakh crore by 2030, focused on cloud computing, AI infrastructure and data centres.
Reliance has announced plans to invest $110 billion, while Adani has outlined investments of $100 billion in renewable-powered AI-ready data centres and related infrastructure by 2035.
Perhaps the strongest vote of confidence comes from the industry’s development pipeline.
According to Cushman & Wakefield, India currently has 3.1 GW of data-centre capacity under construction or in the planning stage, placing it among the top three markets in Asia-Pacific by future pipeline.
More than 10.5 GW of additional capacity remains at the land-acquisition stage.
These are not the numbers of a market that is slowing down. They are the numbers of a market preparing for the next decade.
For years, global technology companies came to India because of its users. Increasingly, they are coming because they believe India can power the next generation of the digital economy.
Challenges remain
Despite the momentum, India’s rise is not guaranteed.
According to Cushman & Wakefield, power transmission losses remain relatively high at 14.2 per cent, highlighting the need for continued improvements in grid efficiency.
Water availability remains another challenge, particularly as AI infrastructure requires increasingly sophisticated cooling systems. Several regions already face water stress, and unchecked expansion of data-centre capacity could create environmental pressures if not managed carefully.
India’s challenge will be balancing rapid growth in digital infrastructure with long-term sustainability. If it succeeds, the country could emerge as one of the world’s most important hubs for cloud computing, AI and the digital economy.
