AI data centre rush fuels India's next growth wave with infrastructure push

India's AI data centre boom is driving investments in clean energy, real estate, manufacturing and jobs as global tech giants and conglomerates expand infrastructure

While the US and China dominate innovation in artificial intelligence (AI), the rush to build the physical computing infrastructure needed to train and run AI models is benefiting India, with investments in this area creating tailwinds for a host of ancillary sectors from clean energy, manufacturing of electrical and electronics gear, various high-end support services and real estate, industry executives said. 

AI-ready data centres being set up by Indian conglomerates like Reliance Industries and the Adani group, as well as tech giants like Microsoft, Google and Amazon are going beyond individual projects to become anchor investments that attract entire industrial value chains, deepening domestic manufacturing, they said. 

Some real estate developers like Lodha Developers have seized the opportunity to set up the utility infrastructure, called powered shells which have all facilities but the IT equipment, for generating a steady stream of annuity income from technology companies that want to lease them. 

Hiring firms said these facilities are creating demand for a new generation of professionals with expertise spanning AI infrastructure, cloud operations, automation, power systems, and critical facilities management. 

India’s strengths in clean energy, land availability and talent pool are aiding in attracting AI-related investments into areas extending well beyond the technology sector, they said. 

The trend points to the beneficial aspects of AI investments in a country where the revolutionary technology’s potential to replace human beings, particularly in entry level jobs, has raised concerns. 

“Every megawatt of AI-ready compute we build translates into orders for domestic electrical equipment and power electronics, demand for advanced cooling and semiconductor-grade infrastructure, long-tenor clean-energy offtake, high-specification real estate, and a rapidly growing market for cyber security and managed services,” said Vineet Mittal, chairman, Avaada group, a large renewable energy developer. 

A rupee invested in AI infrastructure cascades across manufacturing, construction and services, Mittal said.

 

New player in clean energy market 

According to Aditya Malpani, senior director and regional business head (west) at renewable energy company AMPIN Energy Transition, India is uniquely positioned from the perspective of AI data centre boom because of its vibrant open access market. 

Data centres can buy round-the-clock renewable power at competitive rates or replace 70-80 per cent of their conventional electricity requirement through intra-state hybrid renewable projects using the banking mechanism. Besides the framework for Virtual Power Purchase Agreements (VPPAs) allow them to fully offset their large consumption of conventional, or brown, power, explained Malpani.

 

“We believe that AI data centres shall become one of the major source of adding renewable capacity in the country in the short-term," said Malpani.

 

Infrastructure-as-a-service (Iaas)

 

Industry executives said investment in AI data centres is emerging as a growth engine for India’s economy, with its impact extending well beyond digital infrastructure.

 

"As investments accelerate, they are expected to generate demand across sectors such as electrical equipment, semiconductors, clean energy and real estate, while also placing greater emphasis on the reliability, efficiency and quality of power infrastructure," said Felix Kadam, co-founder and managing director of CosPower Engineering, an equipment maker and service provider in the power sector.

 

The significant requirement of high-quality power that is essential for AI data centres will boost demand for critical elements of electrical infrastructure such as capacitors, reactive power compensation systems, harmonic filters and other power quality solutions that optimise energy consumption, improve power factor, protect the equipment and support grid stability, he added.

 

Kadam also said that as India’s AI infrastructure grows, the supporting power ecosystem will also need to develop, which will create an immense potential for indigenous manufacturers and engineering companies. Building resilient, efficient and future-ready power systems will be essential to sustaining the country’s digital and AI ambitions, he said.

 

Besides graphics processing units (GPUs), the engines driving data centres, demand for products such as servers, networking equipment, cables, and other infrastructure components is also growing rapidly.

 

Naresh Singh, senior director analyst at Gartner, an IT consultancy, said the current growth of data centers in India, driven in a big way by AI and cloud, will fuel very strong growth for servers, data centre switches and routers, optical networking cables and transceivers and storage equipment.

 

“AI related data centre infrastructure (largely hardware) itself represents more than half of the overall AI spending in the country. This is likely to continue as AI projects continue to drive demand on data centres,” he added.

 

According to Gartner, Infrastructure-as-a-services (IaaS) is the second fastest growing large IT market segments in India, which is expected to touch $22.5 billion in annual spending by 2030, growing from $6 billion in 2026.

 

“This will propel the data centre hardware spending in the country to be one of the fastest growing markets in the world,” said Singh.

 

Dileep Nadimpalli, senior research manager, enterprise infrastructure, IDC India, said the rapid expansion of data centres in India is creating a multiplier effect on compute infrastructure, fuelled by the combined impact of AI adoption, hyperscale cloud expansion, and increasing data localization requirements.

 

“IDC expects the India server market to grow by more than 40 per cent annually (In terms of revenues) in calendar year 2026, reinforcing the strong correlation between data centre growth and compute infrastructure demand,” he added.

 

Data centres are not just about chips, but about connectivity and 24x7 uptime. This also means the networking equipment and solutions are extremely important.

 

Kamal Kashyap, senior director, compute & high velocity sales, Hewlett Packard Enterprise, India said the rapid expansion of hyperscale, colocation, sovereign cloud, and AI-ready data centres in India is driving strong demand for HPE’s edge-to-cloud portfolio.

 

Kashyap did not share the actual growth or the demand uptick from clients is this sector in India, but said: “As organisations scale AI, cloud, and digital workloads, they require modern compute, storage, networking, and hybrid cloud infrastructure that can support performance, security, and operational efficiency at scale.”

 

Mega investments

 

In February, RIL chairman and managing director Mukesh Ambani said RIL and Jio would invest ₹10 trillion over the next seven years in AI infrastructure. In June, RIL tied up with Meta Platforms for the 168 Mw Jamnagar data centre project.

 

In December 2025, Microsoft announced a $17 billion investment in India over four years on cloud and AI infrastructure and skilling. This is in addition to a $3 billion investment announced in January 2025 in the same area.

 

In October 2025, Google announced its largest investment in India to date of about $15 billion to build an AI hub in the country, in Visakhapatnam.

 

In June, Amazon announced a $13 billion investment to build AI and cloud infrastructure in India. The investment will expand AWS data centre capacity in Mumbai and Hyderabad.

 

Jobs

 

According to IT staffing and digital workforce solutions provider NLB Services, the sector will require around one lakh professionals by the end of the decade in view of the over $126 billion investments committed towards data centre infrastructure and the projected growth in installed capacity from 1.5 Gw to 6.5 Gw by 2030.

 

However, only 15–20% of applicants currently meet the skills requirements for modern data centre roles, NLB Services said in a report released on July 14.

 

As the country accelerates its digital transformation, the sector is creating demand for a new generation of professionals with expertise spanning AI infrastructure, cloud operations, automation, power systems, and critical facilities management, the report said quoting Sachin Alug, CEO, NLB Services.

 

Real estate stimulus

 

Real estate players are either actively evaluating entering the AI-ready data centre space or are deepening their presence.

 

Delhi-based developer Anant Raj which currently operates 28 megawatts (MW) of IT load across its campuses in Haryana’s Manesar and Panchkula, is aiming to expand total IT load capacity to 357 Mw by FY32 across Manesar, Panchkula and Rai.

 

The firm has also signed a deal with the Haryana government to develop a Rs 20,000 crore data centre infrastructure in the state.

 

Earlier this year, Mumbai-based Lodha group said it would be entering the data centres market, with 400 acres of shovel-ready land at Palava (Dombivli), for which it has secured two anchor operators -- Amazon Web Services (AWS) and STT Global Data Centres (backed by Temasek). The group is now planning to develop about 1 Gw of powered shell capacity in this land.

 

The company has ₹1.3 trillion in signed MoUs with the Maharashtra government. The Maharashtra Green Data Centre policy provides substantial fiscal incentives, making Palava’s cost of operations highly competitive globally. The cost of constructing a power shell in Palava is about 30 per cent of that in the US or Europe currently, Abhishek Lodha, Managing Director and Chief Executive Officer at Lodha Developers said in the group’s earnings call for the quarter ended March on April 27.

 

He added that income from the data centres will start coming in by FY29.

 

Bengaluru-based Prestige group has a strategic collaboration with Tokyo-headquartered IT and business giant NTT Data, to develop a data centre facility with a total capacity of 100 Mw and 67.2 Mw dedicated to critical IT load in Bengaluru. Spanning 8.5 acres, the campus features three data centres in the Prestige Tech Cloud campus in Devanahalli, Bengaluru.  

 

Last year, the group had signed a memorandum of understanding (MoU) with the government of Maharashtra to invest ₹12,500 crore into logistics, data centres and global capability centres (GCCs) parks. Of this, a ₹5000 crore investment was earmarked for a large-scale data centre campus in Navi Mumbai’s Taloja.

 

Analysts said data centres are emerging as a major growth driver for India's real estate sector. “We envisage $20-25 billion of planned data centre investments to materialise over the next 4-5 years, driving the capacity to exceed 4,500 Mw by 2030,” said Vimal Nadar, national director & head, research at Colliers India.

 

With 30-40 per cent of data centre project costs being tied to land, construction and infrastructure development, “the multiplier effect is expected to percolate to land acquisition, construction and facility management as well,” said Nadar.

 

Overall, the industry offers a transformative opportunity for real estate stakeholders to build the digital backbone supporting India's ambition to become a global technology and innovation powerhouse, he added.

 

Pankaj Kumar, VP-Fundamental Research, Kotak Securities said that India’s data centre IT load is expected to expand from 1.6 Gw in FY26 to 5 Gw by FY30 and to 14-15 Gw by FY35, driving builtup space requirements from around 25 mn sqft currently to 60 mn sqft by FY30 and to nearly 160 mn sqft by FY35. This creates a sizeable opportunity for developers that can provide strategically located land or build and lease power shells to data centre operators.

 

Vijay Agrawal, managing director-infrastructure, Equirus Capital said the capital requirement for data centre ranges between ₹80 crore and ₹100 crore per Mw, much higher than normal office building.

 

Akshay Shetty, research analyst at Mirae Asset Sharekhan said that land monetisation was leading to value creation for realty companies. “Reported data-centre land values have moved from about ₹2.6 crore per acre in 2021 to roughly ₹21 crore per acre, an almost eight-fold increase in four years, with management/commentary suggesting potential movement towards ₹60-70 crore per acre over the next few years if the ecosystem scales as expected.”

 

Mittal of the Avaada group said the AI data-centre buildout gives India a rare opportunity to deepen domestic manufacturing in electrical equipment and components, accelerate the clean-energy transition and create high-value jobs across engineering, construction and cyber security, all at once.

 

“We believe the companies that combine energy, infrastructure and digital capability will define India's position as a global hub for AI-ready infrastructure,” he added. 

The multiplier effect

• AI boosts multiple sectors: Investments are driving demand for clean energy, manufacturing,  cybersecurity, and networking
• Renewables get a lift: AI data centres are expected to become major buyers of renewable power
• Hardware demand surges: Growth extends beyond GPUs to servers, storage, networking, and power equipment
• Real estate gains: Developers are building AI-ready “powered shells” for long-term leasing income