New Delhi: India’s rapidly expanding data center ecosystem needs swift coordination between states and the center to translate the data center opportunity for the economy.
The states should consult with the Ministry of Electronics and Information Technology (MeitY) and the Ministry of Power to designate specific clusters where land conversion, environmental clearances, trunk fiber, and power evacuation plans are pre-aligned, suggested a strategic report titled “Beyond Infrastructure: India’s Data Centre Pathway to Digital Sovereignty.”
The report prepared by the Centre for Accelerating India’s Growth (CAIG) at the Nation First Policy Research and Change Foundation (NFPRC) further added, "Collaborative approach reduces the approval cycle from a multi-department negotiation to an industrial product where investors choose between ready options with transparent performance obligations."
The states are the decisive interface for land power connections, local clearances, water sourcing, and on-ground enforcement.
What is a data center?
A data center is a physical facility, building, or dedicated space that houses an organization's shared IT infrastructure, including servers, storage systems, and networking equipment.
These centers store, process, and distribute massive amounts of data, acting as the backbone for internet services, cloud computing, business applications, and AI operations.
The report further suggested that the central government needs to play the role of market maker rather than the regulator to convert the opportunity of data centers.
Talking about the need to extend industrial policy, the report added that if India continues importing most servers, high-density racks, liquid-cooling components, and monitoring or control systems, it will remain exposed to supply chain shocks, current risks, and time-to-deploy constraints.
Targeted manufacturing push needed
A targeted manufacturing push focused on thermal infrastructure, power distribution, and monitoring platforms can deliver faster self-reliance gains than attempting to localize the entire server stake at once, it added.
Further, the report suggests that there should be emphasis on non-tariff-driven incentives such as expanded production-linked incentive (PLI) schemes, research and development (R&D) grants, and accelerated depreciation to attract global majors for local assembly and component ecosystems without distorting market composition.
The report projects that India’s data center capacity could grow to 4–8 GW by 2030 and identifies more than 90 Indian cities suitable for future data center development. It also highlights the need for sustainable and resilient infrastructure planning to support the country’s rapidly expanding digital economy.
The report identifies over 90 Indian cities suitable for data center development.
Current status of India's data center industry
India is emerging as a gigawatt-scale data center economy, with 1.25-1.4 GW of installed load placing it among the top-tier destinations in the Asia-Pacific region. The growth is increasingly campus-based, with operators developing multi-hundred-MW portfolios at scale. Demand is real, with 400 MW absorbed in 2024.
Ends.
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