Several major U.S. technology companies have put their plans to lease large data centres in India on hold, following recent trade tensions between New Delhi and Washington.
According to industry executives, orders from Big Tech firms for hyperscalers—data centres that require extensive computing power—remain pending. “The orders are still in the pipeline, but they are holding the pen and saying let me not sign it just yet,” said Alok Bajpai, Managing Director of India for NTT Global Data Centres.
Hyperscalers, including Amazon, Microsoft and Google, currently make up about 30% of India’s data centre demand, a share projected to rise to 35%, according to data from property consulting firm Anarock Capital. However, new deals have been stalled for more than two months. A property consultant, who requested anonymity due to business sensitivities, said companies may revisit their expansion plans within the next three to six months.
Clauses related to tariff pass-throughs, changes in law, and phased capacity have now become common in negotiations. “The new U.S. tariffs on Indian exports have unsettled global supply chains and made equipment and input costs harder to pin down,” said Jitendra Soni, Partner at Argus Partners.
Trade relations between India and the U.S. worsened after the U.S. imposed 25% tariffs on Indian goods in August, later increasing them to 50%, citing India’s import of Russian oil. The situation escalated when U.S. President Donald Trump announced a new $100,000 one-time visa fee on fresh H-1B applications from 21 September, a move expected to impact Indian professionals the most.
Despite these tensions, India’s data centre capacity is projected to nearly triple from 1.2 gigawatts to over 3.5 gigawatts by 2030. Growing demand for e-commerce, cloud infrastructure and AI workloads continues to drive interest, although current uncertainty has slowed negotiations.
A shortage of graphics processing units has already affected data centre expansion, and trade frictions have added another layer of caution. “Hyperscalers haven’t vanished, but have just hit a pause,” the consultant added.
Companies like Google and OpenAI are reportedly exploring large-scale data centre projects in India. “India’s underlying appeal has not dimmed and remains compelling,” Soni said. “But deals are now closing more slowly, and with far more lawyering around who bears the next global shock.”
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