US tech firms hold back data centre leasing in India amid trade tensions

Demand orders for hyperscale data centers from technology majors like Amazon, Microsoft, and Google are still in the pipeline, but the firms are holding off on signing them for now

US technology majors are postponing commitments to lease large-scale data centres in India, unsettled by the recent deterioration in trade ties between New Delhi and Washington, according to a report from CNBC.

 

Hyperscalers drive bulk of demand 

Amazon, Microsoft, and Google currently account for about 30 per cent of India’s data centre demand, a share projected to rise to 35 per cent, according to data from property consultancy Anarock Capital.

 

Alok Bajpai, managing director of India for NTT Global Data Centers, said the orders from big tech companies for ‘hyperscalers’ were still in the pipeline, but the firms were holding off on signing them for now. Hyperscalers build massive data centres designed for extreme scalability, engineered to handle large-scale workloads with optimised network infrastructure, efficient connectivity, and minimal latency.

 

 

Deals stalled for over two months 

New data-centre deals have been stalled for more than two months, while hyperscalers are likely to reassess their plans within the next three to six months, a property consultant was quoted as saying.

 

Tariffs strain India-US ties 

Trade relations between the two countries have worsened in the past two months. In August, the US imposed 25 per cent tariffs on goods from India, later doubling them to 50 per cent, citing India’s purchase of Russian oil.

 

This was followed by the introduction of a new $100,000 ‘one-time’ visa fee on fresh H-1B applications, effective September 21, announced by US President Donald Trump – a measure expected to hit Indian workers the hardest.

 

The US tariffs on Indian exports had unsettled global supply chains and made equipment and input costs harder to determine, said Jitendra Soni, a partner in the technology and data privacy practice at law firm Argus Partners. 

 

₹1.6-trn investment in next 5 yrs

 

India’s data centre sector is projected to attract investments worth ₹1.6 trillion–2.0 trillion over the next five to seven years, according to a report by India Ratings and Research. Data centre companies have announced plans to add a substantial 7.1 gigawatts (GW) of fresh capacity. However, nearly 60 per cent of this remains in the early stages, with 1.3 GW currently under execution and another 1.6 GW still in the planning phase.

 

Sector outlook remains bullish 

India’s data centre capacity is projected to nearly triple over the next five years, from 1.2 gigawatts to more than 3.5 gigawatts by 2030, according to multiple industry estimates, despite the current trade strains with Washington. Lower operating costs and surging demand in e-commerce, cloud infrastructure, and AI workloads continue to drive expansion.

 

However, the uncertainty is reflected in negotiations for new projects where clauses for changes in law and phased capacity are quietly becoming standard, Soni added.