India is rapidly emerging as a prime global destination for data centre development, driven by severe capacity constraints in the United States, Europe, and parts of Asia-Pacific, according to a report by ICICI Securities. The brokerage highlighted that these established markets face structural bottlenecks that hinder their ability to meet surging demand from artificial intelligence and hyperscale cloud providers.
India's Advantage Over Saturated Markets
The report states that India is among the least constrained markets for data centre development, while global tech hubs are reaching their physical limits. This positions India as an environment suitable for rapid hyperscale data centre deployment. The shift is already reflected in significant capital commitments from major technology firms.
Google announced a proposed USD 15 billion investment in AI-focused data centre infrastructure in Andhra Pradesh in October 2025. Microsoft outlined USD 17.5 billion to develop AI-centric capacity by 2030 in December 2025. Amazon committed USD 48 billion by 2030 to expand AI capabilities and exports from India.
Land Banking and Infrastructure Capacity
ICICI Securities noted that India retains over 10.5 GW of capacity at the land-banking stage, ensuring long-term room for expansion that European and American cities physically cannot match. Coastal metros are key hubs: Mumbai has a 3.75 GW pipeline and Chennai 1.36 GW, 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 over 25 systems.
Policy Tailwinds and Tax Incentives
Policy support reinforces 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. Additionally, a fixed 15% cost-plus safe harbour margin has been set for Indian operators servicing foreign entities.
Global Capability Centres as Structural Drivers
Global Capability Centres (GCCs) are a structural driver. Over 49% of newly established GCCs are AI-first from day one, requiring 20-50 kW per rack compared to historical 5-8 kW, 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.
Challenges: Power and Water Consumption
Among risks, power and water loom large. Data centre electricity use is projected to surge to 3% by 2030 from 0.5% today. Securing timely grid connectivity has become increasingly difficult, with 50 MW connections taking 3-5 years in some markets. Water consumption is set to more than double from 150 billion litres in 2025 to 358 billion litres by 2030, with over 50% of India's data centres located in water-stressed regions.
Cost and Scale Advantages Persist
Despite these challenges, cost and scale advantages persist. Among the global top-10 data centre grids, India has the lowest dependence on the national electricity grid and offers huge cost competitiveness among top data centre locations, the brokerage said. Captive solar and wind hubs are helping bypass municipal grid shortages.
