Sridhar Pinnapureddy, Founder and CEO, CtrlS Datacenters

India’s data centre industry is on the cusp of a trillion-dollar investment cycle as it sits at the intersection of three irreversible forces: explosive digital demand, geopolitical realignment, and infrastructure-scale policy support. With over a billion people coming online, AI and cloud workloads multiplying exponentially, and data localisation becoming a strategic imperative, compute is no longer a technology asset, it is national infrastructure. Global hyperscalers, sovereign clouds, AI platforms, and enterprises are all converging on India as both a consumption market and a resilience hub. Add to this India’s improving power grid, rapid renewable capacity, land availability in tier-2 and tier-3 cities, favorable capex-to-opex economics, and a government that views digital infrastructure as economic backbone, and the math becomes inevitable, making a trillion dollars not ambition, but outcome. 

The datacentre sector has experienced extraordinary growth, with industry capacity expected to reach 1.8 GW by 2027, after crossing the significant 1 GW threshold in 2024. This phase of expansion reflects not just capital availability, but growing confidence that India can support long-term, large-scale digital infrastructure if policy and execution move in step. Providing support for sovereign AI compute, together with facility incentives, will be essential for hosting advanced, data-heavy workloads domestically. 

Leading up to Union Budget 2026, our industry anticipated transformative policy measures that would accelerate India’s preparedness for AI-led growth while embedding sustainability at its core. The emphasis has been on measures that enhance predictability by reducing uncertainty around capital deployment, energy access, and operating costs throughout a facility’s lifespan. We called for Union Budget 2026 to enable hyperscale AI infrastructure by introducing focused fiscal benefits for AI factories, GPU computing capabilities, and high-density datacenter facilities, alongside officially designating datacenters as critical infrastructure to strengthen national digital autonomy and secure sustained international capital. 

Power sector reforms

Most importantly, we highlighted that reforming India’s power sector would be the most impactful catalyst for nationwide green datacenter growth. With artificial intelligence workloads demanding unprecedented power density, we sought streamlined renewable energy access via open-access frameworks, the elimination of wheeling, transmission, and additional charges, and extended-duration green power purchase agreements to guarantee a reliable, clean energy supply. Given that datacenters operate for decades and their environmental credentials depend on consistent, reliable, renewable round-the-clock power, these reforms are essential.  

We are pleased to note that the Union Finance Minister unequivocally positioned India as an emerging global powerhouse in digital infrastructure in Budget 2026. The visionary tax holiday, extending all the way to 2047 for foreign companies leveraging our datacenter services for their global cloud offerings, is a gamechanger. This, coupled with the critical enhancement of a 15 per cent safe harbor margin for related entities providing datacenter services, doesn’t just offer economic relief: it’s a profound statement of intent. It directly incentivizes global cloud giants to anchor their operations here, fostering an unprecedented influx of investment and accelerating India’s ascension as the indispensable global cloud capital, driven by robust, scalable, and economically attractive datacenter solutions. The Budget benefits power sector, manufacturing industry, construction sector and SMBs as well.  

These measures complement the previous year’s encouraging steps toward supporting green energy adoption in our sector, though ongoing concerns like GPU availability and tariff clarity require a joint industry-government task force to resolve supply-chain and certification bottlenecks. 

Furthermore, the doubling down on our indigenous capabilities through India Semiconductor Mission 2.0, with an increased outlay of ₹40,000 crore, is a masterstroke. This commitment fortifies our domestic supply chains, ensuring we have the robust, self-reliant hardware ecosystem necessary to build and sustain world-class datacenters that will power India’s digital future and solidify our technological sovereignty. 

The policy tailwinds are clear, and the foundational elements are established. What’s needed now is rapid, collaborative execution by industry and government to convert the strategic vision into concrete results, securing India’s leadership position in the global digital landscape. 

The writer is Founder and CEO, CtrlS Datacenters

Published on February 2, 2026