Media365
India is fast emerging as one of the world’s most attractive destinations for data centre investments as traditional technology hubs in the US, Europe and parts of the Asia-Pacific struggle with severe capacity constraints, according to a report by ICICI Securities.
The brokerage said established global data centre markets are facing “severe structural bottlenecks” due to land shortages, power constraints and rising demand from artificial intelligence (AI) applications and hyperscale cloud providers. In contrast, India remains among the least constrained markets, offering the infrastructure and policy environment needed for rapid expansion.
The shift is already translating into large investment commitments from global technology giants.
Google announced a proposed USD 15 billion investment in AI-focused data centre infrastructure in Andhra Pradesh in October 2025, while Microsoft outlined plans to invest USD 17.5 billion by 2030 to build AI-centric data centre capacity. Amazon has also committed significant investments to expand its cloud infrastructure in India.
The report highlighted that India’s regulatory framework has become increasingly favourable for global operators. It pointed to the government’s clarification on taxation for international revenues routed through India-based data centres and the introduction of a fixed 15 per cent cost-plus safe harbour margin for Indian operators serving overseas entities.
India’s rapidly expanding Global Capability Centre (GCC) ecosystem is expected to further fuel demand. According to the report, nearly 49 per cent of newly established GCCs are AI-first, requiring significantly higher computing density of 20-50 kilowatts per rack, compared with the historical requirement of 5-8 kilowatts. This is accelerating demand for purpose-built, liquid-cooled colocation data centres.
India currently hosts 2,117 active GCCs and accounts for nearly 45 per cent of the world’s GCC talent base, strengthening its position as a preferred destination for AI and digital infrastructure.
However, the report cautioned that the sector faces critical challenges, particularly around power availability and water consumption.
Electricity demand from data centres is projected to rise sharply, with the sector’s share of total electricity consumption expected to increase from 0.5 per cent currently to around 3 per cent by 2030. At the same time, securing large grid connections is becoming increasingly difficult in several markets, where obtaining a 50 MW power connection can take between three and five years.
Water usage is another concern. Annual water consumption by data centres is expected to more than double from 150 billion litres in 2025 to 358 billion litres by 2030, even as more than half of India’s existing data centres are located in water-stressed regions.
Despite these challenges, ICICI Securities believes India retains a significant competitive advantage. The report noted that the country has one of the lowest dependencies on the national electricity grid among leading global data centre markets, with increasing use of captive solar and wind energy helping operators overcome grid constraints while keeping costs competitive.
With AI adoption accelerating globally and digital infrastructure becoming a strategic priority, the report said India is well positioned to become a leading global hub for hyperscale and AI-driven data centre development.
