India is poised to emerge as a global hub for data centres. ICICI Securities projects “multi-billion-dollar investments to ensue over the next decade”. Rising mobile data consumption and massive artificial intelligence (AI) and cloud adoption remain the key growth drivers.
However, what’s really giving India an edge over global countries are scalable power pools, government policies and a strong pipeline.
Why is India emerging as a global data centre hub?
India offers one of the least constrained environments globally for data centre development, at a time when established markets are grappling with power shortages, land constraints and stricter environmental regulations.
“Major tier-1 markets across Europe, North America, and parts of Asia-Pacific (APAC) are facing severe structural bottlenecks and can no longer meet skyrocketing AI and hyperscaler demand…India is currently rated as one of the least constrained development environments globally. ” ICICI Securities noted.
India, however, enjoys several structural advantages over global peers.
| Metric | Figure |
|---|---|
| Land-banked data centre capacity | 10.5+ GW |
| Land required | ~1 acre for every 3-4 MW |
| Mumbai pipeline | ~3.75 GW |
| Chennai pipeline | ~1.36 GW |
| Existing subsea cable systems | 18 |
| Planned subsea cable systems | 25+ |
| Tax holiday for eligible foreign cloud providers | Until 2047 |
| Safe harbour margin | 15% cost-plus |
Developers are increasingly building data centre campuses linked directly to captive renewable energy projects, reducing dependence on municipal power grids.
The report noted that India has more than 10.5 GW of data centre capacity in the land-banking stage, providing significant room for future expansion. It added that around 3-4 MW of power capacity requires roughly one acre of land.
Mumbai and Chennai are also emerging as key gateways because of their subsea cable connectivity. Mumbai alone has a data centre pipeline of around 3.75 GW, while Chennai has about 1.36 GW under development.
India is also expanding its international digital connectivity by increasing operational subsea cable systems from 18 to more than 25.
Government policies boost India’s data centre sector
The Union Budget 2026-27 introduced tax incentives and regulatory reforms to strengthen India’s position as a global cloud and data centre hub. Under the new tax framework, eligible foreign cloud providers will receive a tax holiday until 2047 on international revenues routed through Indian data centres. The government has also introduced a 15% cost-plus safe harbour margin for Indian data centre operators serving foreign technology companies.
India also has Data localisation policy of restricting data flows out of a country. Under this framework, businesses collecting sensitive consumer data must store it in physical data centres located within the country.
Data centres have infrastructure status in India, making them eligible for easier access to financing and enabling eligible investors, including infrastructure investment trusts (InvITs) and alternative investment funds (AIFs), to avail tax benefits, subject to specified conditions.
Indian states offer land, electricity and power incentives
Several states are offering incentives such as land subsidies, electricity duty exemptions, power tariff support and stamp duty waivers to attract investments.
The country also permits 100% foreign direct investment in data centres. However, prior approval from the Indian government is required if the investment is made, directly or indirectly, by a person or entity situated in or residing in a country that shares a land border with India.
Global tech giants’ AI investments in India
Global hyperscalers have already announced large investment plans for India. Google has proposed investing $15 billion in AI-focused data centre infrastructure in Andhra Pradesh, while Microsoft plans to invest $17.5 billion in India by 2030. Amazon has also committed $48 billion by 2030 to strengthen its AI capabilities and expand exports from India.
| Company | Investment |
|---|---|
| $15 billion | |
| Microsoft | $17.5 billion |
| Amazon | $48 billion |
Challenges ahead
Despite the strong growth outlook, ICICI Securities flagged several risks for the industry. Power availability remains one of the biggest concerns as data centres are expected to account for nearly 3% of India’s electricity consumption by 2030, compared with around 0.5% currently.
Water availability, fibre connectivity and long lead times for key equipment such as transformers, generators and grid connections as major execution challenges that could delay future projects.