Why Global Tech Giants Are Racing to Build Data Centres in India

A global race to build data centres in India is gaining momentum as technology companies seek to rebalance where the world’s digital infrastructure is housed — a shift driven by India’s exploding data generation, rising energy costs in the United States, and growing geopolitical and trade frictions.

Despite producing nearly one-fifth of the world’s data, India hosts less than 6% of global data storage capacity, according to industry estimates. This mismatch has pushed global cloud providers, AI firms and telecom majors to accelerate investments in Indian data centre infrastructure to reduce latency, comply with data localisation norms and hedge against rising operational costs in Western markets.

US Energy Costs and Political Pressure

The trend has also been sharpened by political pressure in the United States. Peter Navarro, trade adviser to US President Donald Trump, recently questioned why US-based AI platforms such as ChatGPT consume electricity in the US while servicing users in India and China. Speaking on the Real America Voice podcast, Navarro asked why American consumers should bear the energy costs of powering AI services abroad — comments that hint at potential policy shifts on cross-border digital infrastructure.

Navarro’s remarks come amid broader US-India tensions over tariffs, immigration policies and geopolitical positioning, including Washington’s claims of mediating India–Pakistan tensions and tighter restrictions on work visas such as the H-1B. While no formal policy changes have been announced, the comments reflect growing scrutiny in the US over where energy-intensive AI compute is located.

AI’s Power and Water Footprint

The rapid expansion of AI has significantly increased the electricity and water footprint of data centres, making energy costs a sensitive political issue. Data from the US Energy Information Administration show that the average US electricity bill rose about 5% year-on-year in October, adding to public concern about rising utility costs.

At the same time, the environmental impact of hyperscale data centres — particularly their heavy use of power and cooling water — has drawn scrutiny from regulators and communities in several countries. This has strengthened the business case for distributing AI compute across geographies, including regions like India where renewable energy capacity is expanding and large-scale digital infrastructure is being actively courted by state governments.

Why India Is Attractive

India offers a combination of rapidly growing digital demand, improving power infrastructure, a large domestic market, and policy support for cloud and data localisation. Several states are offering incentives for hyperscale data centres, while undersea cable expansions and fibre backbones are improving connectivity to global networks.

Beyond economics, companies are also positioning data centres closer to where data is generated to meet sovereignty, latency and compliance requirements a trend expected to accelerate as AI adoption spreads across healthcare, finance, manufacturing and public services in India.

A Glimpse of the Future

Popular culture has long imagined the evolution of AI and data centres. The 2014 film Transcendence, starring Johnny Depp, portrayed a future shaped by AI, the Internet of Things and advanced data centre technologies — including green power, advanced cooling and autonomous systems. While fictional, the themes mirror real-world challenges now confronting the tech industry as it scales AI infrastructure sustainably.

As AI compute becomes a strategic asset, where data centres are built is no longer just a commercial decision — it is becoming a matter of energy policy, geopolitics and digital sovereignty. India’s push to host more of the world’s data reflects a broader reordering of the global digital map.