Entering India’s cloud and data centre market: key trends and entry models

India is entering a phase of large-scale digital infrastructure growth: cloud expansion, data localisation and data centre construction are becoming integral to both government and corporate strategies. As capacity increases and services grow more complex, the market is shifting from building infrastructure to managing data, computing and risks, opening up a window of opportunity for international technology providers.

India’s cloud and data centre market: growth drivers and outlook

India is strengthening data localisation through the Ministry of Electronics and Information Technology and the Digital India programme, generating sustained demand for domestic infrastructure. Investment in data centres exceeded USD 6.5 billion in 2025, while the global cloud market is growing at 20–25% annually. The primary drivers are fintech, e-commerce and government services with mandatory in-country data storage requirements, alongside growing demand from large enterprises for resilient and scalable solutions.

The market has transitioned to large-scale infrastructure investment: Google plans to invest USD 15 billion in a data centre in Andhra Pradesh, Adani Group will invest approximately USD 10 billion in data centres, and OpenAI is considering a facility with a capacity of 1 GW or more. Tata Consultancy Services has developed the HyperVault platform and secured USD 1 billion from TPG for gigawatt-scale AI infrastructure.

At the same time, roughly 70% of capacity remains concentrated in Mumbai and Chennai, while Hyderabad is emerging as a fast-growing hub, with capacity projected to increase eightfold by 2030. This is exacerbating the shortage of infrastructure management, automation and cybersecurity solutions outside the key hubs amid Tier III–IV reliability requirements—namely high availability and operational resilience—and pressure to reduce total cost of ownership.

For international providers, this indicates a shift in demand away from hardware supply and toward solutions that integrate with existing infrastructure and enhance its efficiency.

India's data centre capacity demand projection

Source: moneycontrol.com

Where demand is shifting: from infrastructure to the software layer

The strongest demand is converging on the software layer, where infrastructure, data and risk management are necessary.

For international providers, the opportunity for added value in the Indian market is shifting from hardware towards software and services that orchestrate computing, data and risk management. The key niches have already taken shape.

High-growth segments for technology providers in India

• Virtualisation and hybrid cloud management
  Requirements issued by the Ministry of Electronics and Information Technology establish a model that separates sovereign and hybrid environments, driving demand for tools that manage workload distribution and data placement.
• Data centre infrastructure management (DCIM) and automation
  DCIM encompasses data centre infrastructure management, observability, capacity planning and energy efficiency. According to the Uptime Institute, operators are facing rising costs, energy shortages and staffing gaps. With capacity set to grow from 1.5 to 14 GW, these challenges are fuelling demand for telemetry and automation.
• Cybersecurity and regulatory compliance
  Demand is centred on access control, logging, segmentation, system redundancy, disaster recovery and data governance—requirements that are being strengthened by regulators, including the Securities and Exchange Board of India, under the Cybersecurity and Cyber Resilience Framework.
• Sovereign AI and industry-specific platforms
  The IndiaAI initiative has already deployed over 18,000 AI compute units. Meanwhile, according to Tata Consultancy Services (2025), 75% of manufacturing companies expect AI to boost margins by 2026, compared with only 21% prepared for adoption—driving demand for platform solutions ranging from model management to data governance.

Market entry strategies: how to work with Indian operators

In the Indian market, the strongest results are achieved by integrating solutions into the local tech stack—through operators, large enterprises or government platforms. Therefore, collaboration models involving operators such as CtrlS Datacenters, participation in campus projects or partnerships with major corporate groups tend to prove more sustainable than direct sales of infrastructure software from abroad.

• Infrastructure partnerships with local operators
  In Google’s Andhra Pradesh project, the Indian partner provides the site, power and connectivity, while the global partner contributes technology and ensures capacity utilisation. For a software provider, this creates an opportunity to build on top of newly developed infrastructure without capital expenditure.
• OEM and platform integration models
  In the partnership between Reliance Industries and Google Cloud, the international player provides the compute and software layer, while the local partner designs and operates the infrastructure. In this configuration, an external vendor is embedded either as an OEM component or as a management layer.
• Pilot projects and scaled deployment
  The Tata Consultancy Services—OpenAI partnership illustrates a phased approach: the initial 100 MW phase provides a testing ground for solutions, with subsequent scaling to 1 GW built into the core infrastructure rollout.
• Government and sovereign platforms
  The collaboration between Yotta Infrastructure and BHASHINI demonstrates the shift towards sovereign solutions designed for government services and large-scale AI workloads. These involve solutions for data processing, access control, monitoring and secure deployment within national infrastructure.

Financial and regulatory considerations for market entry

As of 2026, the financial model for market entry has become more feasible, but remains complex and requires the localisation of legal and operational frameworks.

• The contractual model requires the separation of financial flows. The FY 2026/27 budget introduced tax incentives valid until 2047 for services delivered to global clients through Indian infrastructure, while serving local clients requires a reseller or a legal entity in the country. The safe harbour regime, set at 15% of costs, favours a structure that combines a global licence, a local partner and in-country service delivery.
• The payment architecture follows a dual-track model. The Reserve Bank of India establishes that rupee settlements complement foreign currency transactions, while cross-border flows are routed through authorised dealer banks. In practice, this creates a split: operational expenses and services are settled in rupees, while licensing and intellectual property are settled in foreign currency.
• Establishing a local entity entails additional reporting requirements. RBI requirements on Foreign Liabilities and Assets (FLA) and the Foreign Liabilities and Assets Information Return (FLAIR) system require foreign-owned companies to file annual returns by 15 July. Non-compliance is treated as a breach of foreign exchange regulations, influencing the choice of a local presence model—direct exports, partnerships, or subsidiaries.
• The service layer requires localisation from the outset. Requirements issued by the Ministry of Electronics and Information Technology, the Reserve Bank of India and the Securities and Exchange Board of India mandate redundancy, disaster recovery, access control, monitoring and exit scenarios, making them a baseline component in any contract.

Go-to-market model: local integration with centralised expertise

Companies entering the Indian market typically use models that combine local integration with centralised technology management:

• A local reseller or systems integrator provides the commercial and tax framework.
• A pilot project with a major client validates the practical value of solutions.
• Local first- and second-line support teams, Security Operations Centres (SOC) and Network Operations Centres (NOC) handle day-to-day operations.
• The product core and key engineering expertise remain on the vendor’s side.

This is the model behind the largest deals of recent years, including the Reliance Industries—Google Cloud partnership and the Tata Consultancy Services—OpenAI projects.

Why India’s digital infrastructure matters for global tech companies

India is building a sovereign digital infrastructure segment where decisions on cloud, data centres and artificial intelligence are shaped by regulatory, energy and financial considerations. For international companies, the entry point is shifting to the software layer—private and hybrid cloud environments, infrastructure management and cyber resilience— with integration through local operators, systems integrators or anchor clients.

Experience suggests that the most sustainable strategies are built through partnerships, pilot projects and phased localisation.