By CR Srinivasan, CEO, Digital Connexion
India’s next phase of digital growth will not be defined by how much infrastructure we build, but by what that infrastructure is capable of. 2026 will be the year when data centers will move from being a capacity engine for cloud adoption to becoming the backbone of India’s AI economy.
With the AI market projected to exceed USD 9 billion by 2028, and with India’s data center market set to add 220 MW in 2026, reaching approximately 1.7 GW, the infrastructure that powered India’s cloud-first decade will not be sufficient. Enterprises across banking, healthcare, and manufacturing are already shifting AI from experimentation to production. This is not a marginal change, it is a structural one. It is redefining expectations around compute density, latency, resilience, sustainability, and regulatory readiness.
The industry’s defining challenge will not be adding megawatts. It will be delivering capacity that is purpose built for AI, operationally sustainable under power and water constraints, and architected to keep India’s critical data and workloads sovereign. Operators who treat this as incremental evolution will find themselves outpaced by those who recognize it as structural transformation.
The AI-Sustainability Equation We Must Solve
AI-readiness and sustainability are no longer parallel priorities, they are structurally linked. The scale and intensity of AI workloads make this unavoidable. As AI workloads drive sustained increases in compute demand, power availability, grid reliability, and water stress have become non-negotiable design constraints, not afterthoughts.
Over the past two years, average rack power densities have more than doubled in advanced facilities, with projections reaching 50 kW per rack by 2027 as GPU-led compute scales. Traditional data centers were never engineered for this intensity, and at AI scale, their energy and cooling models become economically untenable.
Advanced facilities solve this by re-engineering thermal management. Direct-to-chip liquid cooling, immersion systems, and closed-loop water architectures reduce cooling energy overhead while eliminating evaporative water dependency. Advance facilities in India now support 150 kW+ per rack, delivering 3-4x the compute density within the same environmental footprint.
In 2026, this will not be competitive differentiation, it will be table stakes. As GPU-as-a-service models scale and enterprises deploy hundreds of GPUs per campus, advanced thermal management and robust electrical distribution become the baseline. Operators who treat sustainability as compliance will lose to those who engineer it as capacity unlocks.
Interconnection as Critical Infrastructure
Enterprises today need the agility of public cloud, the control of on-premises infrastructure, and the low latency of edge sites working not as silos, but as a unified digital fabric. According to a recent research, nearly 47% of Indian enterprises cite data integration and movement across environments as a key challenge to scaling AI. This makes interconnection infrastructure as important as the compute itself.
Modern data center ecosystems must deliver secure, low-latency, software-defined interconnections across environments, without forcing critical workloads onto the public internet. This is what enables multi-cloud orchestration, distributed AI training, and real-time analytics at scale. When models are trained across multiple clouds and edge clusters, milliseconds are no longer technical details, they are business critical. Interconnection is no longer an added feature. It is the backbone that holds distributed AI systems together.
Sovereignty by Design, Not Exception
India’s regulatory environment is adding a structural layer that will define competitiveness for the next decade. With the Digital Personal Data Protection Act (DPDPA 2023) now in force, data residency is no longer optional for many categories of sensitive information. Emerging AI regulation will extend this further into how models are trained, governed, audited, and moved across borders.
As India builds sufficient domestic AI-grade compute, enterprises should not have to depend on overseas infrastructure for mission-critical innovation. Data centers are evolving into custodians of India’s digital value, providing the physical and legal strongholds where data and AI workloads can operate securely, under national laws.
Sovereignty by design, rather than by exception, will become a defining marker of India’s digital infrastructure maturity.
For operators, this requires a fundamental shift of:
Treating compliance as a design principle, not a contractual afterthought
Embedding transparency and auditability into AI infrastructure to meet future regulatory expectations
Ensuring India’s data assets and the innovation built on them, remain within its jurisdiction and under its control
The Path Forward
India is no longer emerging in AI, it is shaping its global trajectory. With one of the world’s largest developer ecosystems, rapid enterprise adoption, and growing institutional support, the foundations are already in place. Cities such as Mumbai, Chennai, and Hyderabad are becoming strategic nodes in this new digital map, as public–private partnerships accelerate the buildout of AI-grade infrastructure across the country.
The defining question is no longer whether capacity can be added. It is whether growth can be guided with intent. Speed will matter, but so will direction. The next phase of India’s digital infrastructure must meet enterprise demand while strengthening long-term technological resilience, sustainability, and sovereignty.
AI-grade design will become the baseline. Sustainability will become a core engineering discipline. Interconnection will function as a national digital backbone. Compliance will be embedded as an architectural layer, not treated as a legal afterthought.
As this transition is executed with clarity and intent, 2026 will be remembered to be the year India’s data center ecosystem moved from expansion to stewardship, quietly, but decisively enabling the country’s next era of AI-led growth.