With the surging AI usage, the demand for data centers is also increasing. India, in the recent AI summit held in New Delhi, saw more than $277 billion investment into AI infrastructure – mostly for the data centres. However, Nomura noted that these data centres have not contributed to the countries’ GDP much.
What’s the big prognosis going forward? The international brokerage house highlighted the key challenges compared to the opportunities in the AI-led investments thus far.
#1. AI bets equal 6.3% of GDP, growth impact still limited
The AI investments announced at the AI Summit is 6.3% of GDP, spread over the next 5-7 years but in terms of economic benefits India has added only 0.09 percentage point in its real GDP growth, according to Nomura’s estimates.
Nomura, however, expects this trend to change as construction activity begins accelerating in the coming quarters.
#2. What could slow India’s data centre boom?
Nomura flagged key challenges such as land availability, water supply, power access and skilled labour for data centre development. At the same time, it highlighted training initiatives, including Google’s plan to train 20 million public servants and support 11 million students.
#3. Rising data centre capacity will require heavy investments
India’s data centre capacity has already seen a sharp rise to 1.93 GW in 2025 from 0.86 GW in 2023. Nomura expects it to double to nearly 4 GW by 2028. However, this increase in data centres will also have challenges like the need for high investments.
“The construction cost for data centres varies by country, but according to estimates, the cost of acquiring land, equipment, labour, heating, cooling and power consumption comes to an average of $10mn per megawatt. Therefore, doubling of the data centre capacity should contribute to larger investments over the next few years,” Nomura noted.
#4. AI infrastructure to offers new growth path as tradition IT services face questions
In terms of opportunities, Nomura sees a clear opportunity in AI applications and data centre-led growth in future at a time when investors are questioning the future relevance of India’s traditional IT services model due to AI
“We expect India’s construction GDP growth to accelerate in coming quarters, reflecting investments in AI data centres and the necessary ecosystem,” Nomura noted.
Nomura also noted that expansion in AI infrastructure is expected to drive demand across sectors such as construction, power, electrical infrastructure and server manufacturing.
#5. Reliance, Adani and others unveil massive AI bets
In the AI Summit, domestic players like Reliance Industries and Jio announced an investment of around $110 billion over the next seven years. The plan includes data centres, 10 GW of green power capacity and edge computing infrastructure.
Adani Group committed $100 billion by 2035, focusing on renewable energy-powered, AI-ready hyperscale data centres.
Microsoft announced a $50 billion investment by 2030 for data centres and compute infrastructure, while Google reaffirmed its $15 billion investment for an AI hub in Vizag, which will also include an international subsea cable gateway.
Tata Group announced multiple partnerships, including with OpenAI and AMD, to build AI-ready data centre capacity starting at 100 MW and scalable up to 1 GW.
Conclusion
Nomura Noted that the investment announced in the AI Summit is likely to go into hyperscale data centres, led by Indian conglomerates and US technology firms will position India as a critical partner in the global AI supply chain, particularly for the US.
India has also formally joined the US-led “Pax Silica” initiative, that focuses on building a secure and trusted global supply chain for AI and semiconductors.