The Population-to-Power Equation: Why India is the Next Global Data Center Frontier

India is now home to more than 1.46 billion people, making it the world’s most populous nation. Out of this, around 806 million people can be counted as active internet users, a figure that places India second only to China.

With so many people online, everyday actions, like a UPI transaction, a video stream, or a simple AI chatbot query, generate an immense and growing demand for computing power. These billions of interactions explain why India can be seen as the largest reservoir of digital demand on Earth.

Rising Digital Demand

When Reliance Jio launched its mobile services in September 2016, it triggered a change in the Indian data consumption trend. Overnight, the cost of mobile data in India dropped to some of the lowest in the world, and usage skyrocketed. Affordable broadband opened the gates for millions of new internet users, transforming how Indians accessed information, entertainment, and commerce.

Mobile Data Cost Per GB in India (2015-2024)

That foundation has only grown stronger. By the end of 2024, India recorded more than 162 billion UPI transactions, moving an astonishing rupee 23.25 trillion (USD 283 billion) through its digital payments network. These real-time transactions represent one of the clearest examples of computing at a national scale: billions of micro-payments processed instantly, securely, and continuously.

The momentum doesn’t stop at payments. India has also emerged as one of the world’s fastest adopters of generative AI tools. Surveys show that 41% of Indians use AI tools daily, more than double the rate in the U.S. and Europe. In the workplace, adoption is even higher, with about 92% of Indian employees saying they regularly rely on generative AI, the highest percentage worldwide. In the consumer space, India now leads in ChatGPT usage globally, accounting for about 13.5% of all active users, surpassing even the United States.

India's Internet Users Growth (2016-2024)

What began with cheaper data has matured into a digital ecosystem where payments, AI, and public services all intersect in real time. This acceleration is what makes India’s adoption curve so unique: a leap from first-time mobile access to everyday AI, in less than a decade.

While India’s digital activity continues to surge, its data center infrastructure is struggling to keep up

Infrastructure Lagging Behind

India rivals China in population, but the data center landscape tells a very different story. The country currently operates only 152 data centers, a fraction compared to the 5,381 in the United States and 449 in China.

Major Data Center Hubs Across India (2024)

This imbalance highlights a widening supply-demand gap. On one side, more than 806 million active internet users generate billions of digital interactions every day. On the other hand, the country’s data infrastructure remains modest in scale, struggling to keep pace with the surge in connectivity, cloud adoption, and AI-driven workloads.

India vs. China vs. US - Population vs. Number of Data Centers (2024)

It is precisely this mismatch, massive demand paired with relatively limited infrastructure, that positions India as the world’s next frontier for hyperscale data center buildout. For global cloud providers, AI companies, and colocation giants, the opportunity is both undeniable and urgent.

Building India’s AI Backbone

India’s data center landscape is entering a new era, shaped by a mix of global ambition and domestic drive. OpenAI’s Stargate project leads the charge, planning a staggering 1GW of AI data center capacity, which is enough to power the most compute-intensive AI workloads in the world. This project underscores India’s emerging role as a critical node in global AI infrastructure.

Not far behind, AWS has committed to investing USD 12.7 billion by 2030 to expand cloud infrastructure across the country. The initiative includes hyperscale data centers, edge locations, and AI-optimized compute clusters to serve enterprises, startups, and public sector organizations alike.

Microsoft is broadening its footprint through new Azure regions and AI labs. The company is not only increasing storage and compute capacity but also investing in skilling programs, aiming to train 10 million Indians in AI tools, cloud engineering, and enterprise solutions by 2030.

Google Cloud is also expanding in Mumbai and Delhi by building next-generation facilities designed for AI and cloud workloads. These centers are designed to support high-volume data processing, low-latency services, and the growing demand from India’s fast-growing enterprises.

Domestic players are driving parallel growth. Reliance Jio is scaling its data centers to support its entire digital ecosystem, from telecom networks to fintech and cloud services. Adani is investing in hyperscale facilities in Chennai and other regions to provide AI-ready infrastructure to the country.

Whereas Yotta is operating one of India’s largest data centers in Navi Mumbai, specifically optimized for AI and enterprise workloads, while Sify is expanding its presence to meet demand for colocation and hyperscale services.

Together, these projects are not just increasing capacity; they are reshaping the geography of digital power in India. Global and domestic players are collaborating, sharing technology, and building the foundation for a hyperscale ecosystem that can handle the world’s most demanding AI and cloud workloads.

India is no longer just a consumer market; it is becoming a core engine of global digital infrastructure.

The Energy and Infrastructure Challenge

The scale of projects like OpenAI’s 1GW Stargate data center is overwhelming, not just in terms of compute, but also in power demand. To put it in perspective, a facility of this size could consume as much electricity as a mid-sized Indian city like Pune, underscoring the magnitude of the energy challenge that comes with India’s AI and cloud ambitions.

Meeting this demand sustainably is no small task. Renewables, particularly solar and wind, will play a central role, and hybrid systems combining storage and smart load management will be essential to reduce reliance on conventional grids.

Cooling is another unique challenge. India’s tropical climate keeps temperatures high year-round, making traditional air-cooling inefficient and energy-intensive. Companies are experimenting with liquid immersion cooling, green architectural designs, and modular tank systems, all aimed at keeping AI workloads running efficiently while cutting down on power use.

Land selection and regulatory frameworks further shape how and where these centers are built. Special Economic Zones and coastal hubs like Mumbai, Chennai, Visakhapatnam, and Hyderabad offer strategic advantages, from reliable power and ports to tax and policy incentives.

In short, building India’s next-generation data centers is about far more than just racks and servers. Energy, climate, geography, and policy are intertwined, and getting this balance right will determine whether India can truly become a global hyperscale hub.

India: The Neutral Digital Hub

Amid the escalating US-China AI rivalry, India is emerging as a neutral digital hub. While the US has imposed bans on the use of its chips in Chinese systems, India maintains a non-aligned stance, positioning itself as a strategic partner for global hyperscalers seeking to diversify their infrastructure.

This neutrality is appealing to major tech players. OpenAI's recent announcement of plans to establish a data center in India as part of its USD 500 billion Stargate project underscores India's growing importance in the global AI landscape.

The Stargate project, described by Donald Trump as “the largest AI infrastructure project in history,” is designed to support the development and deployment of advanced AI systems with extensive global infrastructure. As part of this endeavor, India will play a key role by hosting significant data capabilities that help power AI applications worldwide

India's strategic positioning is further solidified by its Digital Personal Data Protection Act (DPDPA), enacted in 2023. This legislation mandates that certain categories of personal data be stored within India, granting the government authority to restrict cross-border data transfers to countries lacking "adequate data protection standards." This regulatory framework provides a level of data sovereignty that appeals to both domestic and international stakeholders.

In summary, India's strategic positioning as a neutral digital hub, coupled with its robust data protection laws and regional infrastructure initiatives, underscores its emerging role as a central player in the global digital landscape.

India: Powering the Future of AI

India’s 1.46 billion-plus population isn’t just a statistic; it is the largest driver of digital demand in history. Every smartphone tap, UPI transaction, video stream, or AI query contributes to an ever-growing need for computing power, making the country a unique epicenter for digital infrastructure.

The race to build data centers in India is about more than serving a domestic market; it is a critical piece of the global infrastructure strategy. Hyperscale facilities, AI-ready hubs, and cloud expansions are all being designed to meet worldwide computing needs, with India at the center of the map.

As one industry observer put it: “Whoever builds in India, builds for the future of global AI.” In a world where data is power, India’s population-to-power equation positions it not just as a market, but as a strategic engine of the next generation of global AI innovation.