India emerges as a top global data centre hub amid global constraints

India is becoming a key global destination for data centres due to capacity issues in major markets, an ICICI Securities report says. The country is attracting huge investments from tech giants like Google, Microsoft, and Amazon for AI infrastructure.

India is emerging as a major global destination for data centres as key international markets face capacity constraints, according to a report by ICICI Securities.

The report said data centre markets in Europe, North America and parts of the Asia-Pacific region are facing "severe structural bottlenecks," making it difficult to meet the rising demand from artificial intelligence (AI) and hyperscale cloud providers. It said India is currently among the least constrained markets for data centre development, while established global technology hubs are reaching their physical limits. The report added that India offers an environment suitable for rapid hyperscale data centre deployment.

Major Investments Fueling Growth

The shift is already visible in capital commitments. Google in Oct'25 announced a proposed USD 15bn investment in AI-focused data centre infrastructure in Andhra Pradesh, Microsoft in Dec'25 outlined USD 17.5bn to develop AI-centric capacity by 2030, and Amazon committed USD 48bn by 2030 to expand AI capabilities and exports from India.

Strategic Advantages and Infrastructure

"India retains over 10.5GW of capacity at the land-banking stage. This ensures long-term room to expand that European and American cities physically cannot match," ICICI Securities noted.

Coastal metros are key: Mumbai has a 3.75GW pipeline and Chennai 1.36GW, serving as "critical high-speed subsea cable landing gateways" routing traffic between Europe, the Middle East and Southeast Asia. India is also expanding its subsea network from 18 to 25+ systems.

Favourable Policy and Tax Incentives

Policy tailwinds reinforce the momentum. The Union Budget 2026-27 "shifted India from a high-growth demand destination into a high-margin global operational hub," the report said. Eligible foreign cloud providers receive "an absolute tax holiday until 2047 on all international revenues routed through Indian-based data centres," and a "fixed 15% cost-plus safe harbour margin" has been set for Indian operators servicing foreign entities.

Structural Drivers: The Rise of GCCs

GCCs are a structural driver. "Over 49% of newly established GCCs are AI-first from day one," requiring 20-50kW per rack versus historical 5-8kW, forcing a shift to "purpose-built, liquid-cooled colocation data centres." India now hosts 2,117 active GCCs and "45% of the total global GCC talent base."

Key Challenges: Power and Water Scarcity

Among risks, power and water loom large. Data centre electricity use is "projected to surge to 3% by 2030" from 0.5% today, and "securing timely grid connectivity has become increasingly difficult," with 50MW connections taking 3-5 years in some markets. Water consumption is set to "more than double... from 150bn litres in 2025 to 358bn litres by 2030," with ">50% of India's data centres located in water-stressed regions."

Cost Competitiveness and Solutions

Still, cost and scale advantages persist. "Among the global top-10 data centre grid, India has lowest dependence on national electricity grid," and offers "huge cost competitiveness among top data centre locations," the brokerage said, adding that captive solar and wind hubs are helping bypass municipal grid shortages. (ANI)

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