Why Are Google, Microsoft and NVIDIA Pouring Billions Into India’s Data Centre Boom?

Synopsis: India is emerging as a global hotspot for data centres, attracting billions from tech giants like Google, Microsoft, and NVIDIA. Driven by cost advantages, digital growth, and strategic demand from Asia and Europe, the country is rapidly positioning itself as a key hub for AI, cloud, and hybrid infrastructure.

India is quietly emerging as a global hotspot for data centres, attracting massive investments from leading tech giants. With rising demand for cloud computing, AI infrastructure, and hybrid storage solutions, the country is positioning itself as a key hub for next-generation digital infrastructure, offering a mix of cost advantages, talent, and strategic opportunities that few markets can match. But what is driving this surge in investments?

Data Centre Boom In India 

India is rapidly establishing itself as a leading global hub for data centre investments, driven by strong digital adoption and cost efficiencies. Between FY20 and FY25, the country’s data centre capacity grew by 28.1 percent, rising from 0.4 GW to 1.3 GW, and is expected to reach 4.7-5.7 GW by FY30, reflecting a CAGR of 30.1-35.1 percent. Revenue for Indian data centre operators expanded at nearly 24 percent CAGR from FY17 to FY23, fueled by ongoing capacity additions. This growth is projected to continue, with revenues expected to rise at around 32 percent CAGR during FY24-FY26.

Global technology companies have already made significant investments in India. NVIDIA has partnered with the Tata Group and Reliance Industries to develop supercomputing data centres and AI infrastructure in the country. 

Reinforcing this trend, Microsoft announced USD 23 billion in new AI investments, with the majority earmarked for India. CEO Satya Nadella confirmed that USD 17.5 billion will be invested in India, its largest commitment in Asia, building on an earlier USD 3 billion pledge. This four-year investment plan, starting in 2026, is aimed at establishing Microsoft as the country’s largest cloud-computing provider.

Earlier in October, Adani Enterprises’ joint venture, AdaniConneX, and Google announced a major collaboration to build India’s largest AI data centre campus in Visakhapatnam, Andhra Pradesh. The AI hub represents a USD 15 billion investment over 2026-2030, with gigawatt-scale data centre operations supported by subsea cable networks and clean energy sources. The project will be executed in partnership with AdaniConneX, Airtel, and other ecosystem partners to cater to India’s growing AI and data infrastructure needs.

With close to a billion internet users and a deep pool of technical talent, India has become a key destination for U.S. tech giants investing heavily in AI infrastructure. Given the country’s limited domestic chip-manufacturing capacity, data centres have become the most practical avenue to participate in the global AI boom. But why is India emerging as the preferred choice for these companies?

What Is Driving The Demand? 

Cost Advantage

The cost of building data centres differs widely across global markets, and India continues to rank among the most cost-efficient locations. This makes the country a strong choice for hyperscale and colocation players looking to expand capacity. In 2024, India saw one of the steepest rises in data centre construction costs within APAC, with expenses increasing by about 5 percent.

The jump was driven by rising land prices, growing demand for power infrastructure, and the shift toward high-spec, AI-ready facilities. Even with this increase, India remains far cheaper than established markets such as Japan and Australia. The country benefits from ample land availability, a large and increasingly skilled contractor base, and relatively low entry costs, which together strengthen its investment appeal.

India’s cost advantage is highlighted in the Turner and Townsend Data Centre Cost Index (DCCI) 2024, which compares construction costs across 50 major global markets. Mumbai’s DCCI score of 0.60 is among the lowest worldwide, with only Shanghai being slightly cheaper at 0.55. In comparison, Tokyo and Singapore are among the most expensive markets, with cost indexes of 1.3 and 1.25 respectively.

London (1.0) and North Virginia (0.95), the world’s largest data centre hub serve as benchmarks and further emphasise how significantly more affordable it is to build in Mumbai and across India. This cost structure gives India a strong competitive edge over many developed markets.

For a 5-acre land parcel with a 50 MW build capacity, land and site acquisition costs differ significantly across India’s major data centre clusters. Bengaluru Peripheral South is priced at about Rs. 263 crore, while Chennai’s Ambattur area stands at Rs. 145 crore. Gurugram remains one of the more expensive markets at Rs. 400 crore, whereas Noida is comparatively lower at Rs. 118 crore.

In Hyderabad, the variation is sharp, with South Hyderabad at jus tRs. 45 crore and West Hyderabad rising to Rs. 338 crore. In the Mumbai region, Panvel is relatively affordable at Rs. 41.7 crore, while Powai is among the costliest locations at Rs. 533 crore, followed by Thane Belapur Road at Rs. 344 crore. These calculations are based on the local FX rate of USD 1 equalling Rs. 83.67 as of the end of CY24.

Middle Eastern Nations Eyeing India for Strategic Data Embassy Hosting

The Middle East is increasingly viewing India as a strategic data centre destination, especially for setting up data embassies. These data embassies are secure, offshore digital storage facilities where nations keep critical information to maintain sovereignty, ensure security, and guarantee access during cyberattacks, natural disasters, or geopolitical disruptions.

They function under the legal jurisdiction of the originating country, similar to physical embassies, and were first introduced by Estonia. As countries prioritise digital sovereignty and resilience, the concept is gaining global traction.

India is currently in advanced discussions with the UAE and several other nations to host such data embassies. The proposed UAE data embassy, likely to come up in Andhra Pradesh, will allow Abu Dhabi to store a protected backup of its sovereign data in India while retaining complete control over it. This move underscores India’s rising status as a global data centre hub, supported by its technological strength, infrastructure maturity, and favourable cost structure.

Such collaborations are expected to boost demand for high-security digital infrastructure in India and attract more sovereign and institutional clients. They also position India as a trusted and neutral location for sensitive data storage, enhancing its geopolitical standing.

Additionally, this model opens the door for creating specialised strategic data zones that could serve multiple countries, accelerating investment in advanced hosting, encryption, and disaster recovery capabilities across the Indian data centre ecosystem.

Singapore Demand Moving To India 

Singapore has long served as Asia’s digital backbone thanks to its strong data infrastructure and excellent connectivity, making it a central hub for cloud adoption and digital transformation. But rising concerns over high energy usage and limited land availability led the government to impose a moratorium on new data centre construction in 2019. Although the pause was lifted in 2022, it came with strict sustainability requirements, forcing operators to adopt advanced energy-efficient designs and incorporate renewable power sources.

These constraints, combined with space and regulatory pressures are pushing many Singapore-based data centre operators to look outside their home market to meet future demand. India has emerged as one of the most attractive alternatives due to its lower construction costs, abundant land, and supportive policy environment. 

Strengthening connectivity is also contributing to this shift. Projects like Reliance Jio’s multi-terabit India-Asia-Xpress (IAX) undersea cable system, which links Singapore’s Tuas region directly to Mumbai with 12 landing points across five countries, enhance India’s position in the regional digital network. Such initiatives help establish India as a strong contender for hosting next-generation digital infrastructure and absorbing demand that Singapore may no longer support domestically.

India Becomes a Hosting Hub as Europe Faces Energy Strain

Europe is experiencing a sharp rise in data centre demand as AI adoption accelerates, digital transformation deepens, and cloud and edge computing expand rapidly. But this growth is set to put heavy pressure on the region’s already stretched energy systems.

Data centre electricity consumption in Europe is projected to rise by nearly 160 percent by CY30, reaching around 287 TWh a year, more than Spain’s total power use in CY22. If this expansion continues to rely on fossil fuels, carbon emissions from new EU data centres could jump from an estimated 5 million tonnes in CY25 to about 39 million tonnes by CY30, surpassing the combined emissions of Lithuania and Estonia in CY22.

These challenges are prompting many European companies to look for alternative hosting locations, and India is emerging as a viable choice. This shift is already visible, with European cloud provider OVHcloud setting up a data centre in India. The country offers a strong mix of advantages: a reliable power grid, a large pool of skilled professionals, and cost-efficient infrastructure capable of handling both domestic and global workloads. India’s coastal regions provide further benefits, including proximity to near-shore wind and solar power projects and energy storage facilities.

This reduces transmission infrastructure expenses, minimises energy losses, lowers carbon emissions, and avoids land acquisition challenges for power corridors. Moderate coastal temperatures can also help reduce cooling-related energy and water consumption for data centres.

Additionally, renewable energy projects in India can be scaled quickly due to their modular nature, allowing capacity additions to keep pace with the rapid expansion of data centres. By co-locating renewable energy and data centre infrastructure, India can ring-fence energy flows and avoid overburdening local distribution networks.

With growing access to green power and a push for energy-efficient technologies, India offers a sustainable alternative to Europe, which is grappling with rising emissions and power constraints, and to APAC markets that face scale limitations.

These strengths reinforce India’s position as an emerging global data centre hub. In CY23, OVHcloud launched its first Asia-Pacific data centre in Mumbai, marking its debut in the region. This investment reflects India’s strong digital growth potential and aligns with the country’s increasing emphasis on data protection regulations.

Data Coming Home as Hybrid Cloud Grows

Data repatriation refers to the process of moving data, applications, services, or specific workloads from public cloud platforms such as AWS, Azure, or Google Cloud back to on-premise data centres, private clouds, or hybrid storage environments. While organizations are attracted to public clouds for their scalability, flexibility, and easy accessibility, they often face challenges like high storage costs, data privacy risks, regulatory compliance requirements, and the need for improved performance and control.

Companies may repatriate data either fully or partially to balance the benefits of cloud platforms with the control offered by local infrastructure. This trend reflects a broader shift in IT strategy: some enterprises move selected workloads back in-house, while many others, including large and mid-sized players, simultaneously migrate workloads from private clouds to more flexible hybrid and public cloud setups.

The banking sector, in particular, is seeing increasing adoption of data repatriation, driven by compliance and cybersecurity requirements. Regulatory authorities such as CERT-In (Indian Computer Emergency Response Team) have issued increasingly stringent and time-sensitive mandates that are often difficult to implement in third-party cloud environments.

Additionally, banks face challenges in achieving complete visibility and control over data flows in public clouds, including understanding the underlying ports, protocols, and technologies. These limitations make monitoring and securing data more complex.

At the same time, a new class of “neo-cloud” providers is emerging. Unlike traditional hyperscalers, these companies focus on regional deployments, sovereign cloud models, edge-first infrastructure, or industry-specific cloud services. They typically offer better pricing transparency, lower total cost of ownership, and greater control over data flows and other benefits that appeal to enterprises rethinking their cloud strategies. 

Many of these neo-cloud providers are considering India as a strategic location for hosting computation-heavy workloads due to its cost advantages, strong developer ecosystem, and growing renewable energy capacity. As India’s AI ecosystem continues to develop, these providers are likely to set up data centre operations in the country, following a trajectory similar to hyperscalers who have expanded aggressively in recent years.

-Manan Gangwar

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