India's IT Infrastructure Spending Could Approach ₹15 Lakh Crore as AI and Data Centres Dominate New Investment

India is in the middle of one of the largest technology investment waves in its history. From hyperscale data centres rising on the outskirts of Mumbai and Chennai to AI computing clusters, cloud platforms and the power infrastructure needed to run them, capital is flowing into the country's digital backbone at an unprecedented pace.

The numbers are striking. Proposed investments in India's IT-enabled services sector reached ₹14.98 lakh crore between April 1 and August 5 of the 2026-27 financial year, according to an economics research report by Bank of Baroda. That represented 56% of all proposed investments in the country during the period, which totalled ₹26.75 lakh crore. Nearly 99% of the IT-related commitments were linked to data centres and artificial intelligence, and 86% of total announced investments came from Indian private companies.

At the same time, research firm Gartner forecasts that India's overall IT spending will exceed $176 billion in 2026, up 10.6% from about $159.5 billion in 2025, with spending on data centre systems growing faster than any other segment. Taken together, the figures suggest India's IT infrastructure push is moving into the ₹15 lakh crore range, a scale that would have been hard to imagine only a few years ago.

Data centres lead the charge

Gartner expects spending on data centre systems in India to grow 20.5% in 2026 to about $9.4 billion, after a 29.2% jump in 2025. The firm attributes the growth to investment in AI infrastructure, government programmes supporting the domestic AI ecosystem, and data privacy and sovereign cloud requirements that encourage companies and public bodies to keep data within India's borders.

Software spending is forecast to rise 17.6% to about $24.7 billion, as Indian enterprises increase investment in AI-enabled applications. IT services spending is expected to grow 11.1% to about $35.4 billion, while devices, still the largest category, are forecast at about $66.4 billion and communications services at about $40.4 billion.

"India has one of the largest consumer bases for AI services globally," said Naresh Singh, senior director analyst at Gartner. DD Mishra, a vice president analyst at the firm, said IT services spending in India is forecast to grow 11.1% in 2026, supported by infrastructure as a service, consulting and application modernisation, with double-digit growth averaging 12% to 14% expected over the next few years.

Cloud spending accelerates

The shift to cloud computing is another major driver. Gartner forecast in June that end-user spending on public cloud services in India will rise 28.1% to $17.5 billion in 2026, from $13.7 billion in 2025. Infrastructure as a service, which provides computing power and storage on demand, is the fastest-growing segment, expanding about 40%, while platform as a service is the largest category at about $6.4 billion.

"Strong enterprise demand for AI-ready cloud infrastructure is redefining cloud investment priorities in India," said Ashish Banerjee, a senior principal analyst at Gartner.

Global cloud providers, including Amazon Web Services, Microsoft and Google, have announced multi-billion-dollar investments in Indian data centres in recent years, while domestic players such as Bharti Airtel's Nxtra, Reliance, Adani and Yotta are building large capacity of their own. Nxtra raised $1 billion this year in the largest venture deal in India in 2026, according to Tracxn data.

The scale of what lies ahead

Longer-term estimates are even larger. A report by OmniScience Insights Labs published in July estimated that India may need $350 billion to $435 billion of investment in AI and data centre infrastructure by 2030. Of that, $77 billion to $96 billion would go to traditional data centres and $270 billion to $340 billion to AI training and inference clusters. Announced investments in India's data centre sector already total $160 billion to $200 billion, the report said.

India's operational data centre capacity, about 1.6 gigawatts today, would need to reach 19 to 23 gigawatts by 2030 under that scenario. AI-focused facilities require six to seven times as much capital per megawatt as conventional data centres, reflecting the cost of advanced chips, networking and cooling.

Power becomes the binding constraint

The biggest challenge may be electricity. The OmniScience report estimated that data centres could consume about 160 terawatt-hours of electricity a year by 2030, nearly 6% of India's projected national consumption, rising to about 8% by 2035.

That demand will strain grids in states that host data centre clusters, such as Maharashtra, Tamil Nadu, Telangana and Uttar Pradesh. Climate economist Nicholas Stern argued this week that India should require data centre developers to supply their own renewable power, noting that renewables are now the cheapest source of electricity in the country. The experience of the United Kingdom, where Microsoft recently withdrew from a planned AI data centre after grid operators said power would not be available until the 2030s, shows how quickly grid capacity can become a bottleneck.

Water for cooling, land availability and transmission infrastructure are further constraints that will shape where and how quickly capacity can be built.

Why the money is coming to India

Several factors are drawing investment. India's vast digital economy, built on platforms such as UPI, Aadhaar and widespread smartphone use, generates enormous volumes of data. Data localisation requirements in sectors such as payments and the Digital Personal Data Protection Act encourage companies to store and process data domestically.

The government's IndiaAI Mission is subsidising access to computing capacity for startups and researchers, and states are competing to attract data centres with incentives on land, power and approvals. More than 1,700 global capability centres operated by multinational companies in India also drive demand for cloud and computing infrastructure, according to GlobalData, which forecasts India's enterprise ICT revenue will grow at a compound annual rate of 15.5% through 2030.

Risks to the outlook

Not all announced investments will materialise. Proposed projects often take years to complete, and some may be delayed or scaled back if financing becomes harder or demand grows more slowly than expected. Globally, investors have grown more cautious about the vast sums being spent on AI infrastructure, and chip stocks recently suffered their longest losing streak since 2008 amid doubts about returns.

India also depends heavily on imported chips, servers and networking equipment, exposing the build-out to global supply constraints and currency movements. The rupee's weakness this year has raised the rupee cost of imported hardware.

What it means

For India's economy, a technology investment wave on this scale offers significant benefits: construction activity, demand for power and equipment, high-skilled jobs and a stronger foundation for AI adoption across industries. It could also help India position itself as a regional hub for cloud and AI services.

The challenge for policymakers and companies is to turn announcements into operational capacity, while securing clean, reliable power and keeping costs competitive. If they succeed, India's IT infrastructure could become one of the defining growth stories of the decade, underpinning everything from digital payments and e-commerce to artificial intelligence built for India's billion-plus users.