US seeks greater India market access for its data centre companies

May negotiate favourable conditions under BTA

The United States is pushing for greater access for its data centre operators eyeing the Indian market and is expected to seek a more streamlined process for establishing both large-scale greenfield data centre parks and smaller greenfield or brownfield facilities, sources told Business Standard.  

   

As part of the ongoing discussions around the bilateral trade agreement (BTA), the US is likely to negotiate favourable terms for its companies--ranging from affordable land and uninterrupted electricity supply, tax breaks, and duty exemptions for some of the imported products, such as switches and switchgears, sources said.

 

“That is one of the demands they have made. Though we allow 100% FDI (foreign direct investment) for data centres in India, some processes can be streamlined better. We are looking into it,” a senior government official said.

 

The domestic data centre market is estimated to be worth $10 billion, with nearly 70 per cent of the growth happening across big cities such as Mumbai, Chennai, Hyderabad and the Delhi-National Capital Region. This growth is expected to increase multiple times over 2025 as the demand for compute power, storage and data management capabilities increases, real-estate consultancy Anarock said in a report.

 

The country is likely to need an additional colocation data centre capacity of 1.7-3.6 gigawatts (GW) by 2028, owing to rapid digital adoption and the generation of large amounts of data, according to experts.

 

One of the key impediments to the expansion of data centre parks in India is the lack of a stable electricity supply. Earlier this year, the Ministry of Electronics and Information Technology initiated talks with the Power Ministry to ensure India has enough power for data centres and AI computing facilities, according to reports.

 

Apart from a greater market access for its data centre companies, the US is also learnt to have sought clarity on some aspects of the proposed rules under the Digital Personal Data Protection (DPDP) Act, another official said.

 

“They want assurances on cross-border data transfer and the norms around it. We have explained our stance and are waiting for their input. The rules are pretty much self-explanatory,” an official said.

 

India and the US are currently negotiating various aspects of the BTA, which is likely to be made formal sometime later this year. While both India and the US have resolved to conclude the first tranche of the BTA by fall, Indian officials have spoken about concluding an ‘early tranche’ by July 8. This is when Washington’s current pause on country-specific reciprocal tariffs will expire.

 

Globally, the US has remained India’s largest trading partner for the fourth consecutive year in 2024-25 with bilateral trade valued at $131.84 billion. According to industry data, the US accounts for about 18 per cent of India's total goods exports, 6.22 per cent in imports, and 10.73 per cent in the country's total merchandise trade. 

Data so far

 

> The domestic data centre market is estimated to be worth $10 billion

> Demand for PC power, storage, data management capabilities to boost data centre market 

> The country may need an additional colocation data centre capacity of 1.7-3.6 Gw by 2028

> The US has also sought clarity on some aspects of the rules under the Digital Personal Data Protection Act