Data Centres as the Backbone of India’s Digital Future

The Economic Survey 2026 indicates that data centres will play a crucial role in shaping India’s digital landscape, primarily due to the surge in AI workloads, the rise in cloud services, and increased 5G data usage. It projects that the capacity of data centres will grow to approximately 8 GW by 2030, a significant rise from 1.4 GW recorded in the second quarter of 2025.

Current Landscape of Data Centres in India

Currently, India accounts for only 3% of the world’s data centres, highlighting a clear “competitiveness gap” that needs addressing. The survey explains that AI data centres are highly specialised facilities tailored to accommodate the demanding computational requirements of artificial intelligence, machine learning, and deep learning applications.

Emerging Competition in the Region

The survey also points out the rise of new data centre hubs in countries like Malaysia (particularly Johor), Japan, and Vietnam, which intensifies the competitive landscape. It mentions that overcoming structural challenges, such as energy shortages, will be vital for India if it aims to establish itself as a key player in the global AI data centre arena.

The Shift Towards Green Data Centres

Additionally, the shift towards Green Data Centres, aimed at reducing energy consumption and emissions, is emphasised. The goal is for these centres to fulfil at least 50% of their energy requirements through sustainable sources by 2030. The survey encourages innovation beyond conventional data centres, noting that success in the age of AI requires a proactive and strategic approach.

Pillars of India’s Digital Leadership

India’s aspirations to emerge as a global digital frontrunner pivots on two main components: robust physical data infrastructure and government cloud services. These elements are essential in fostering an AI-ready ecosystem.

While the projections offer a blend of optimism and complexity, the forthcoming Union Budget 2026 will play a crucial role in determining how the government intends to enhance India’s AI infrastructure and support the ambitious target of achieving 8 GW in data centre capacity.