India’s investment landscape is seeing a major shift as new data centre projects and rising infrastructure costs drive spending in the information technology sector. IT investments reached 4.5% of GDP over the 12 months from Q4 2025 to Q3 2026, up from 0.8% during the same period a year earlier, according to a research note by Nomura.
New data centre projects and higher cost estimates for existing projects were the main drivers. The sector accounted for around 28.4% of all newly announced investment projects. A tax holiday for foreign companies, announced in the Union Budget 2026–27, also supported investment plans, based on data from the Centre for Monitoring Indian Economy (CMIE).
However, Nomura warned that limited access to power and water could slow project execution.
The report also highlighted changes in India’s services trade. Rising imports of consultancy, digital, technical and trade services are affecting the country’s services trade surplus. Nomura linked this trend to the expansion of Global Capability Centres (GCCs), wider artificial intelligence (AI) adoption, increased focus on data centres and growing imports of intellectual property (IP).
The rise in IP imports may partly reflect lower domestic spending on research and development, Nomura said.
Despite support from remittances and a services trade surplus, India’s current account deficit widened by $3.5 billion year-on-year during the April–August period of FY27.
The findings highlight the growing role of data centres and AI in India’s investment activity, while also pointing to infrastructure constraints and changing patterns in services and intellectual property trade.
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