Why data centres are becoming as strategically important as roads, power grids and telecom networks

By Leslie D’Monte

For decades, economic competitiveness rested on highways, ports, airports and telecom networks. Today, data centres have joined that list, not merely because they house servers but because they provide the computing power that increasingly determines how economies innovate, businesses compete and governments deliver services.

This marks a subtle but important shift. For years, India’s digital ambitions were defined by software exports, IT services and digital public infrastructure. Artificial intelligence (AI) is now expanding the definition of national infrastructure to include compute and the facilities that enable it.

Whether real or synthetic, structured or unstructured, data remains AI’s essential raw material. But data has little value without the computing infrastructure that transforms it into intelligence. Every stage of the AI lifecycle — from pre-training and post-training to inference, retrieval augmented generation (RAG) and the emerging class of cache-augmented generation (CAG) — depends on modern data centres. According to JLL, AI accounted for only about a quarter of data-centre workloads in 2025, with model training driving demand. By 2030, AI could account for half of all workloads, with inference becoming the dominant use case.

India is positioning itself for this shift. According to CBRE, operational data-centre capacity reached about 1,700 MW in 2025 after a record 440 MW of new supply, and is projected to grow another 30% this year. These numbers matter less as indicators of a real estate boom than as evidence that computing infrastructure is becoming part of India’s broader economic strategy.

Reliable computing capacity already underpins the Unified Payments Interface (UPI), the Open Network for Digital Commerce (ONDC), financial markets, healthcare platforms, Global Capability Centres (GCCs) and the growing use of AI across manufacturing and services. As more critical services become digital, resilience is no longer simply an IT concern. The ability to withstand cyberattacks, infrastructure failures or sudden spikes in demand has become a matter of economic stability. In that sense, data centres are beginning to occupy the same strategic space as power grids and telecom networks.

Investors have recognised the opportunity. CBRE estimates cumulative investment commitments in India’s data-centre sector reached $126 billion by the end of 2025 and could exceed $180 billion this year. States including Maharashtra, Telangana, Tamil Nadu, Andhra Pradesh and Uttar Pradesh are competing to attract these investments through dedicated policies, while operators are gradually expanding beyond the major metros into tier-II cities to support AI applications, 5G networks and data-localisation requirements.

The investment model is evolving too. Global hyperscalers such as Amazon Web Services, Microsoft Azure, Google Cloud and Meta are expanding their footprint in India to place computing capacity closer to users, reduce latency and meet regulatory requirements. Increasingly, they are doing so in partnership with Indian companies that bring land, power, renewable energy, execution capabilities and local expertise. Reliance Industries and the Adani Group are emerging as infrastructure partners, while technology companies such as Tata Consultancy Services, HCLTech and Sarvam AI are helping build the broader AI ecosystem.

Yet the conversation cannot stop at investment announcements. AI has turned electricity into a strategic resource. Every investment in computing infrastructure is also an investment in power generation, transmission capacity and grid reliability. Data-centre policy is therefore becoming inseparable from energy policy. Gartner estimates that AI-optimised servers will account for 31% of data-centre power consumption in 2026, surpassing conventional servers the following year.

AI is also changing the economics of computing. Building an AI-ready data centre—with dense GPU clusters, advanced networking and liquid cooling—is significantly more capital-intensive than building a conventional cloud facility. JLL estimates average global construction costs have risen from $7.7 million per MW in 2020 to $10.7 million in 2025, and are expected to reach $11.3 million this year. The countries that benefit most from AI will therefore not simply be those that build the largest server farms, but those that can power them reliably, sustainably and at competitive cost.

However, the country’s data centre capacity is expected to grow exponentially from 1.4 gigawatts (GW) last year to 9GW in 2030, and in doing so, they are likely to consume about 3% of India’s electricity in 2030, up from less than 1% currently. The challenge is to meet such demands sustainably, and the answer lies in battery storage and renewable energy. And – Over the past decade, this sector has attracted investments estimated at US$6.5 billion, generating an impressive US$1.2 billion in revenue last year.

This is India’s next infrastructure challenge. Expanding computing capacity while managing pressure on electricity networks, water resources and urban infrastructure will require coordinated planning rather than isolated policy initiatives. Operators are improving cooling technologies, increasing renewable-energy use and deploying AI to optimize operations. Governments are responding with green incentives and faster approvals. But the larger task is to ensure that infrastructure planning, energy policy and digital strategy evolve together.

The success of India’s data-centre build-out will ultimately be measured not only in megawatts installed or billions invested, but in whether it enables the IndiaAI Mission, strengthens digital public infrastructure, accelerates AI adoption across industry and makes the economy more resilient and globally competitive. In the AI era, that may prove to be one of the country’s most consequential infrastructure investments.

– Leslie D’Monte is a veteran independent journalist, MIT fellow, author of ‘AI Rising: India’s Artificial Intelligence Growth Story,’ and a technology writer who has covered the AI and data centre space closely for years