As demand for artificial intelligence (AI) infrastructure grows, India offers cost advantages, a renewable energy focus and a strategic location for the development of data centres. However, its emergence as a global AI data centre hub depends on bridging gaps in AI infrastructure, talent availability and policy framework. Per Deloitte India’s latest report titled Attracting AI Data Centre Infrastructure Investment in India, the country could require an additional 45–50 million square feet of real estate space and 40–45 Terawatt Hours (TWH) incremental power by 2030 to meet the growing demand for AI. The report further suggests that targeted policy interventions will be critical in positioning India as a global AI hub.
The report identifies six key pillars for India to reach its full potential in building a world-leading, AI-ready ecosystem. These pillars are real estate, power and utilities infrastructure, connectivity and network infrastructure, compute infrastructure, talent and policy framework.
“For India to accelerate its AI capabilities and realise its potential, it is necessary to introduce enabling policies to support the sector. India must develop its AI-ready infrastructure to meet this rising demand for data analytics and processing. Moreover, strengthening research and development (R&D), improving talent pipelines, securing vernacular datasets and supportive policies will further accelerate the AI-driven growth. By addressing key areas of growth and investment and promoting stronger public–private partnerships, India can solidify its position as a global AI ecosystem leader,” said S. Anjani Kumar, Partner, Deloitte India.
“India’s strategic location allows it to serve domestic and global markets effectively, positioning it as a critical node in the global data centre ecosystem. However, India’s vision to become a global AI hub demands a relook at the traditional data centre infrastructure. A greater focus on building high-performance compute infrastructure, scalable power and cooling systems and efficient networking infrastructure, with a reconsideration of policy framework, can make India a hotspot for AI-powered data centre development in the coming years,” said Neha Aggarwal, Partner, Deloitte India.
While India offers an advantage in data centre real estate with lower land and labour costs, significant new constructions are needed to meet the additional AI data centre capacity. The report highlights how rising interest in colocation models and government initiatives offering incentives under various state government data centre policies are helping drive growth. From a policy perspective, the report suggests that introducing a separate category for data centres in the National Building Code and recognising them under the Essential Services Maintenance Act could further incentivise specialised infrastructure development. Additionally, fast-tracking and simplifying the approvals by setting up data centre facilitation units can help boost the deployment of data centres.
The rapid expansion of data centres in India intensifies pressure on the country’s power infrastructure, creating an urgent need for enhanced transmission capabilities and grid stability. Substantial investments are needed to expand generation capacity, upgrade infrastructure and better integrate renewable energy sources, which are supported by advancements in energy-efficient cooling and offshore and onshore power sourcing. Building a supportive policy framework for dedicated power supply infrastructure and improving renewable energy banking policies and regulations across states will be critical to creating sustainable data centres.
Despite significant improvements, India continues to face network and connectivity challenges such as limited fibre optic reach in rural areas, unreliable high-speed internet and high latency, which limit the country from realising its full potential in building data centres. Addressing these gaps through strategic investments in expanding fibre networks, improving last-mile connectivity and ensuring network redundancy is critical to enabling efficient data centre growth. The report emphasizes the key policy support needed in this area, including enabling affordable access to dark fibre and campus cross-connects and aligning dark fibre regulations with global best practices. Further, easing regulatory frameworks for data centres to invest in and operate their terrestrial and subsea network infrastructure will enable rapid scale-up.
Compute infrastructure is a critical component of AI data centre operations. To stay competitive, the report suggests that India must urgently boost Graphics Processing Unit (GPU) supply, promote GPU-as-a-Service (GPUaaS) and attract foreign investment to build Exaflop-scale capacity with high-performance GPUs. Substantial public–private investment in GPUs, memory, storage and software is essential. Furthermore, engaging in Government to Government (G2G) conversations will be key to diluting the impact of restrictive policies such as the US AI Diffusion Framework on GPU imports.
The report emphasizes that India’s workforce must upskill to fit into AI and data centre ecosystem roles, accelerating sector growth. The lack of AI-focused research institutions limits local talent development and AI R&D. Partnering with educational institutions and tech companies to develop specialised training programmes focused on practical AI skills is essential.
Finally, policy support such as Text and Data Mining (TDM) exceptions under the Copyright Act, streamlined data localisation norms and the creation of dedicated data centre zones will be key to strengthening India’s AI infrastructure. Additionally, amending data access provisions under the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023 to reflect data centres’ operational realities and excluding data centres from surveillance scopes under the Telecommunication Act, 2023 will provide key policy support required for boosting India’s data centre capacity. Lastly, implementing safe harbour rules for data hosting service providers and establishing data embassies will catalyse investment and spearhead India’s data centre revolution.
