India Targets AI Growth With $60 Billion Data Center Push

The Government of India is pursuing a dual strategy to establish itself as a global artificial intelligence hub by attracting massive foreign investment and funding domestic infrastructure. Global technology companies plan to invest nearly $60 billion in AI-driven data centers across the country. To secure these projects, the central government proposed a tax holiday until 2047 for foreign cloud companies that use Indian data centers to serve overseas clients.

State governments in Maharashtra, Andhra Pradesh, and Telangana are competing for these investments by offering subsidized land, power, water, and fiscal incentives. Maharashtra is projected to host the largest market with 4,376 MW of capacity by 2030, followed by Andhra Pradesh and Telangana. However, the Ministry of Power warns that AI data centers could add 26.3 GW of electricity load by 2031-32, accounting for nearly 7 percent of the nation's projected peak demand.

To address a heavy reliance on foreign hardware—with 90% to 95% of chips currently imported—the government is investing 10,372 crore rupees (approximately $1.1 billion) into the IndiaAI Mission. This initiative has already onboarded over 38,000 GPUs to provide affordable compute resources to domestic institutions. Additionally, the India Semiconductor Mission 2.0 aims to enable the design and manufacture of chips for 70% to 75% of domestic applications by 2029. Despite these efforts, private AI investment in India remains low at $1.16 billion, trailing significantly behind the $109.1 billion seen in the United States.