Kunal Bajaj, Chief Executive Officer and Co-Founder, CloudExtel
India is experiencing an unprecedented digital transformation, fuelled by hyper-growth in data generation and phenomenal expansion in digital services adoption. At the heart of this revolution are hyperscalers, which are the global leaders in large-scale cloud and data centre infrastructure whose investments, strategies and ecosystem initiatives are redefining the contours of India’s digital infrastructure landscape. This article delves into the evolving role of hyperscalers in India’s data centre ecosystem, highlighting key investment trends, emerging infrastructure needs, ecosystem shifts and strategic imperatives critical to sustaining India’s digital leadership.
India’s data centre capacity has witnessed a remarkable surge over the last half-decade. Installed capacity has increased from just 307 MW in 2019 to approximately 950 MW as of 2024, with projections estimating that capacity will more than double again to reach 2,300 MW by 2027. Despite this rapid expansion, India holds only a 3 per cent share of global data centre capacity, while generating nearly 20 per cent of the world’s data, underscoring a significant gap and a pressing need for infrastructure scale-up to support domestic data sovereignty and service performance. As of now, data centres are concentrated in Mumbai and Chennai – the two cities accounting for 70 per cent of the country’s installed capacity.
Hyperscalers are pivotal drivers of this transformation. Their evolving approach encompasses investment in expanding data centre footprints, deploying cutting-edge artificial intelligence (AI) and computing infrastructure, and establishing subsea and terrestrial connectivity to improve latency and bandwidth for India’s massive digital user base. India’s user statistics speak volumes about the ecosystem’s scale and potential: the country dominates platforms such as Instagram, WhatsApp, Facebook, YouTube and Android globally in terms of active users, with hundreds of millions engaging daily on these platforms. Additionally, India ranks as the world’s largest user base for emerging AI technologies such as ChatGPT, intensifying demand for AI-optimised infrastructure.
The hyperscaler capex landscape represents a seismic shift in global data centre investment strategies. Hyperscaler investments ballooned from approximately $24 billion in 2015, accounting for 20 per cent of global data centre capacity at the time, to a projected $315 billion in 2025, when they will own nearly 60 per cent of global capacity. This expansion is underpinned by a strategic shift from leasing to owning 40-60 per cent of capacity, driven by the need for customised infrastructure tailored to AI workloads, long-term cost efficiencies and control over the data centre environment essential for rapid innovation. This shift also entails hyperscalers dictating data centre specifications, with bespoke designs focused on energy efficiency, scalability, and integration with AI and edge computing technologies.
Subsea cable infrastructure forms the critical digital backbone, enabling hyperscaler global connectivity. Historical telecom consortium ownership models have ceded ground to hyperscalers, who now own and operate most undersea cables supporting international data flows. With more than 57 submarine cable investments by Google, Meta, Amazon Web Services, and Microsoft combined, these hyperscalers ensure massive bandwidth capacity and robust, low-latency links critical for AI model training, cloud synchronisation and real-time data services. Google’s fully owned Equiano cable landing in Mumbai and Meta’s Waterworth project exemplify this commitment to strengthening India’s digital linkages to the global ecosystem.
India-specific hyperscaler investments paint a vivid picture of a country rapidly becoming a critical node in the global cloud infrastructure map. Google is investing $10 billion to create Asia’s largest data centre cluster with 1 GW capacity in Visakhapatnam. Microsoft’s partnership with Reliance Jio includes a $4.4 billion investment in Hyderabad and a joint enterprise AI platform-as-a-service initiative. Meta has identified Mumbai and Visakhapatnam as key landing points for submarine cable projects and is investing significantly in data centre and AI infrastructure. Meanwhile, new data centre regions are emerging in Pune and Chennai, driven by hyperscale and enterprise demand. These investments are not simply expanding compute resources but also catalysing ancillary industries, creating thousands of direct and indirect jobs, and underpinning India’s AI aspirations.
With such rapid growth, infrastructure challenges come to the fore, particularly concerning data centre-to-data centre connectivity, which remains the largest bottleneck. Legacy fibre optic networks in India cater largely to traditional telecom requirements with priorities on maximum geographic reach, cost control and moderate redundancy. These networks struggle to meet hyperscaler needs for ultra-reliable, low-latency and high-capacity pathways tailored for massive intra- and intercity data flows. Moreover, many fibre networks are ageing – over 70 per cent are older than 10 years and were installed without the required flexibility for hyperscale upgrades.
Addressing network quality, ecosystem execution and regulatory obstacles is imperative. Traditional engineering, procurement and construction vendors often lack incentives to upgrade proactively to meet hyperscaler demands, focusing instead on cost over quality. Regulatory implementation gaps, local body resistance and multi-jurisdictional coordination complexities further encumber network expansion. The Telecommunications Act of 2023 has provided a more progressive framework, yet practical challenges remain in uniform roll-out and enforcement across states and municipalities.
A critical enabler for overcoming these barriers is the emergence of carrier-neutral fibre infrastructure dedicated specifically to data centre connectivity. Neutral operators prioritise long-term asset ownership and are investing in dark fibre with 20-30-year life cycles to offer open access to multiple carriers and hyperscalers, creating an equitable, reliable and future-proof environment. These neutral networks enable hyperscalers to connect once to a single infrastructure, gaining access to multiple carriers and reducing dependency risks. This approach also supports the necessary redundancy, control and minimum latency hyperscalers demand, while minimising disruptions and facilitating dynamic capacity scaling aligned with computing growth.
This choice architecture of connectivity, emphasising neutrality and quality, is essential for hyperscalers operating in India’s key metro ecosystems, such as Mumbai, Chennai, Delhi NCR, Bengaluru and Hyderabad. These cities are prioritised based on current and projected data centre capacity and traffic demands. Investment in fibre infrastructure must parallel data centre capacity expansions to prevent network congestion from becoming a rate-limiting step. Moreover, maintaining high service levels requires rigorous on-ground execution capabilities, proactive capacity planning and seamless stakeholder collaboration among government agencies, vendors and hyperscalers.
In this regard, hyperscalers increasingly seek to partner with infrastructure providers who bring stable, quality-driven operational execution on the ground, ensuring alignment with infrastructure capacity growth and quality standards – a vital requirement as their core business focus remains on compute and digital services rather than physical network management.
Beyond the infrastructural imperatives, hyperscalers’ growth narrative is intricately linked to India’s aspirations in AI and digital innovation. India ranks as the second largest AI user market globally, fuelled by significant adoption of cloud AI services and breakthroughs in AI application domains such as enterprise software, chatbots and digital commerce. Hyperscaler investments thus support AI workload specialisation with custom data centre designs featuring graphics processing units-heavy compute clusters and advanced cooling technologies, crucial for energy efficiency and operational reliability.
These developments feed directly into broader socio-economic impacts. Hyperscaler investments create large employment opportunities, both direct and ancillary, and stimulate ecosystem growth, including local tech start-ups, training programmes and technology research centres. Several hyperscalers have committed to developing AI skill-building initiatives, aiming to train millions of Indian professionals over the next 5-10 years, thereby deepening India’s talent reservoir critical to sustain innovative momentum.
Sustainability underpins the future readiness of hyperscaler infrastructure. Energy consumption for data centres is forecasted to rise markedly, with hyperscalers leading initiatives to integrate renewable energy sources and optimise energy usage using state-of-the-art cooling and power management solutions. These efforts dovetail with India’s renewable energy targets and climate commitments, ensuring that digital infrastructure growth is environmentally sustainable and economically viable.
In summary, hyperscalers in India represent more than a technology evolution; they are the architects of a digitally empowered future. Their unprecedented capital deployment totalling hundreds of billions globally and tens of billions within India, coupled with strategic infrastructure innovation, neutral connectivity models, policy collaboration and sustainability focus, position the nation to emerge as a top-tier global data infrastructure hub.
For India’s data centre ecosystem to sustain this trajectory, a confluence of factors is needed: ongoing investment in high quality data centre campuses, neutral and redundant fibre networks supporting agile interconnectivity, consistent policy and regulatory enablers, and collaborative engagement between hyperscalers, telcos, service providers and government bodies. By fostering such an ecosystem, India can decisively bridge the gap between data demand and hosting capacity, harness emerging AI opportunities and build a resilient, future-proof cloud infrastructure foundation.
