Growing pressure on data centre capacity across major global markets is creating new opportunities for India, with a recent report highlighting the country as one of the most attractive destinations for large-scale digital infrastructure investments.
According to the report, traditional data centre hubs in the US, Europe and parts of the Asia-Pacific are facing severe structural challenges due to limited land availability, power shortages and rising demand from artificial intelligence (AI) workloads and hyperscale cloud providers. In comparison, India offers a favourable infrastructure and policy environment that supports rapid expansion.
The report noted that global technology companies are already increasing investments in India. Google has proposed a USD 15 billion investment in AI-focused data centre infrastructure in Andhra Pradesh, while Microsoft plans to invest USD 17.5 billion by 2030 to expand AI-driven data centre capacity. Amazon has also committed major investments to strengthen its cloud infrastructure across the country.
India’s supportive regulatory environment has further boosted investor confidence. The report highlighted government measures, including clarity on taxation for international revenue routed through India-based data centres and a fixed 15% cost-plus safe harbour margin for Indian operators serving overseas entities.
The country’s growing Global Capability Centre (GCC) ecosystem is also expected to drive demand. Nearly 49% of newly established GCCs are AI-first and require computing densities of 20-50 kilowatts per rack, compared to the earlier requirement of 5-8 kilowatts. India currently hosts 2,117 active GCCs and accounts for nearly 45% of the world’s GCC talent base.
Despite the strong outlook, the report cautioned that power and water availability remain major challenges. Data centres are expected to increase their share of India’s electricity consumption from 0.5% to around 3% by 2030. Annual water consumption is also projected to rise from 150 billion litres in 2025 to 358 billion litres by 2030, while more than half of the country’s existing data centres are located in water-stressed regions.
However, the report said India’s increasing use of captive solar and wind energy gives it a competitive advantage by reducing dependence on the national electricity grid. With global AI adoption accelerating, India is well positioned to become a leading destination for hyperscale and AI-powered data centre development.
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