by Mr. Mukesh Soni, CFO, Digital Connexion
For years, data centers were viewed as the digital equivalent of warehouses. This was invisible infrastructure built primarily to store enterprise information, support cloud migration, and ensure uptime. Today, however, data centers are increasingly being recognised as economic engines that directly shape GDP growth, capital formation, productivity expansion, and digital competitiveness.
The shift is especially visible in developed economies, where digital infrastructure has become foundational to national economic output. A 2025 J.P.Morgan study estimated that spending on data centers could contribute between 10-20 basis points to U.S. economic growth in 2025-2026. In Singapore, which became a regional cloud and hyperscale hub early in the digital transformation cycle, the contribution of the digital economy to growth has been increasing steadily.
This contribution stems not just from construction activity, but from downstream economic productivity enabled by cloud computing, AI services, and digital commerce. For instance, a recent study by the Georgia Institute of Technology revealed that data centre activation increases local employment by 3.5%, total wages by 5.0%, and business establishments by 4.7%.
Data centre infrastructure acts as a force multiplier by stimulating broader economic sectors including financial services, software exports, logistics, and advanced manufacturing. This is especially true in the age of AI, which relies heavily on the availability of compute infrastructure. AI adoption alone could boost global GDP by as much as 15 percentage points by 2035, effectively creating an economic uplift comparable to the Industrial Revolution, according to a PwC study.
Having established their role as economic engines in advanced markets, data centres are now poised to play an even more transformative role in emerging economies. India is at the forefront of this transition. With aggressive capacity expansion, increasing AI workloads, and a fast-digitising enterprise base, data centre infrastructure is set to become a foundational pillar of the country’s economic growth story.
As India accelerates toward an estimated 10 GW of data centre capacity over the coming years, it is increasingly clear that digital infrastructure will not merely support growth, but will become a defining driver of country’s next phase of GDP expansion.
India’s next GDP engine
Historically, data generated in India was often stored overseas or used primarily for transactional workloads. The AI economy fundamentally alters this dynamic. AI models require localised compute infrastructure for training, inferencing, low-latency processing, regulatory compliance, and real-time decision-making, making proximity to data increasingly critical.
India is already one of the world’s largest generators of digital data, producing nearly 17% of global data volumes. This demand is driven by combination of population scale, digital payments ecosystem, mobile-first internet adoption, rapid enterprise digitisation, and public digital infrastructure. Together, these factors create sustained demand for high-performance compute within the country.
In this context, domestic data centre capacity is no longer optional. Sovereign AI ambitions, coupled with evolving data localisation requirements, position compute infrastructure as a strategic economic asset. As the digital economy’s contribution to GDP continues to expand, data centres will move beyond their traditional role to become a core engine of productivity, innovation, and economic growth in India.
AI-ready data centres will be India’s strategic growth drivers
For decades, infrastructure capital gravitated towards building roads, airports, and power grids, i.e. assets prized for predictable, long-term cash flows. Data centres are now entering that league, but with structurally higher growth trajectory. This is evident in the increasing participation of global private equity firms, sovereign wealth funds, and pension funds in the Indian Data Centre Industry. The attractiveness lies in durability and visibility of its returns: long-term enterprise contracts, hyperscaler demand, and relentlessly rising AI compute requirements give data centres revenue visibility few infrastructure plays can match. India, with one of the world’s fastest growing digital demand curves, further strengthens this investment case.
The economics become even more compelling in the AI era: inferencing and GPU-intensive workloads generate far greater value per megawatt than legacy hosting, and every new AI deployment, fraud detection, precision manufacturing, healthcare diagnostics, autonomous systems, deepens demand for localised compute.
Realising this potential, however, hinges on a foundational enabler that often goes undiscussed: power. Data centres are among the most power-intensive assets in modern infrastructure, and India’s ambition to scale to 10 GW of data centre capacity will place extraordinary demand on the national grid. A single hyperscale facility today can continuously draw between 100 to 500 MW, and next-generation AI campuses are being planned at gigawatt scale. For this build-out to succeed, transmission infrastructure and grid capacity must keep pace. This requires coordinated investment in high-voltage transmission corridors, grid modernisation, renewable energy integration, and dedicated power supply for emerging data centre clusters across Chennai, Hyderabad and Mumbai. Equally important is the reliability and quality of power supply: voltage fluctuations and outages carry disproportionate operational and financial consequences for compute-intensive facilities. Without a robust, high-capacity, and increasingly clean power grid, data centre expansion risks being constrained not by lack of demand or capital, but by the inability of the grid to deliver the electrons these facilities require at scale.
Regulation is now reinforcing what economics already favours. India’s tightening data compliance regime, the Digital Personal Data Protection Act, now in force, alongside sector-specific localisation mandates such as the RBI’s rules on payment data and IRDAI’s on insurance records, is pushing more data to be stored and processed within the country. For global and domestic enterprises alike, this shift turns domestic compute from a discretionary choice into a compliance necessity, channelling fresh capital into Indian data centres. Set against the strategic value of national digital resilience, these forces converge to make the investment case unusually durable.
India’s defining infrastructure opportunity
The real opportunity lies not in replicating the past, but in building for the next economic paradigm.
Previous industrial revolutions were built on physical infrastructure — railways, highways, ports, and power grids. The next economic transformation will be built on compute infrastructure.
Ultimately, countries that lead the next decade of growth will not simply be the ones generating the most data. They will be the ones capable of converting that data into intelligence, productivity, and economic output at scale.
India already possesses the demand fundamentals, digital adoption scale, and AI ambition necessary to lead this transformation. What is needed now is decisive action, accelerated infrastructure investment, policy frameworks that enable scale, and long-term capital commitment to build the digital backbone of the AI economy.
Therefore, data centres cannot be viewed as peripheral digital assets any longer. They must be recognised for what they truly are: strategic economic infrastructure that will underpin competitiveness, innovation, and GDP growth in the decades ahead. The real question is not whether India will need this infrastructure, but whether it can build it at a pace required to lead in the AI-driven global economy