India is rapidly positioning itself as a key regional hub for data centres, driven by surging demand for internet services, artificial intelligence applications, and regulatory pushes for data localisation. Despite producing nearly 20 percent of the world’s data, the country currently accounts for only three per cent of global data centre capacity, highlighting a vast scope for growth.
Telecom major Airtel’s data centre arm, Nxtra, has announced plans to invest $600 million to nearly double its capacity to 400 MW by 2027. This expansion underscores the confidence of industry leaders in India’s long-term digital infrastructure needs, particularly as cloud computing and AI workloads multiply.
Cost competitiveness is a key factor boosting India’s attractiveness as a hub. With operating costs at roughly $80 per kilowatt per month, the country enjoys a significant advantage over regional peers such as Indonesia. This affordability, combined with a strong domestic talent pool of around 375,000 AI professionals, positions India as a natural choice for global companies seeking to scale digital operations.
However, the sector also faces constraints, particularly in terms of power supply and electrical infrastructure. Analysts caution that bottlenecks in distribution networks could slow down expansion unless addressed through coordinated investment and policy support. Ensuring reliable and sustainable energy access will be vital for meeting the sector’s growing needs.
Regulatory frameworks, especially data localisation requirements, are adding further impetus to domestic capacity expansion, compelling global and domestic firms alike to house critical infrastructure within India.
Industry observers believe that overcoming infrastructure challenges could unlock immense potential, making India not only self-sufficient in data storage and processing but also a competitive hub serving the wider Asia-Pacific region. With demand accelerating, the next decade is seen as pivotal for cementing India’s place in the global digital economy.
