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.