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How India’s dependence on foreign data centres can affect digital growth?

Posted By: Hari Ram Posted On: Apr 04, 2026Share Article

Image Credit: ChatGPT Image

How can India’s dependence on foreign data centres affect businesses and digital growth?

India Data Centre Capacity 2030: According to media reports, India’s data centre capacity is projected to grow nearly fivefold, from over 4,500 MW (4.5 GW) to potentially 8 to 10 GW by 2030, driven by rising AI workloads, cloud adoption, and a 20 to 30 billion dollar investment surge.

India Data Centre Capacity 2030: India’s digital economy is growing at a rapid pace, driven by cloud computing, SaaS, AI, fintech, and enterprise digitization, with data becoming central to business operations and decision-making. However, a significant share of business-critical information continues to be stored in foreign data centre, raising concerns around control, security, resilience, and long-term sustainability.

While global cloud providers have supported early digital expansion, increasing dependence on external infrastructure exposes businesses to risks such as regulatory challenges, higher costs, latency issues, and geopolitical uncertainties. As data emerges as a strategic asset, the need for local, sovereign cloud infrastructure is becoming more critical. At the same time, India’s data centre capacity is projected to grow nearly fivefold, from over 4,500 MW (4.5 GW) to potentially 8 to 10 GW by 2030, driven by rising AI workloads, increased cloud adoption, and a 20 to 30 billion dollar investment surge. Largely concentrated in Mumbai, this expansion will require over 50 million sq. ft. of real estate to meet the growing demand fueled by digital transformation and data localization, according to a report.

The current global situation requires organizations to evaluate their technological dependencies, as they face multiple operational challenges. Rising geopolitical tensions and ongoing conflicts have created a scenario where digital infrastructure exists in a state of global vulnerability. When companies store their critical business information outside India’s borders, they become reliant on foreign systems operating under international regulations and policy frameworks. Organizations need to establish sovereign cloud infrastructure, as the current system limits operational control and introduces external risks.

Emphasizing this shift, Mr. Manoj Dhanda, Founder & CEO of Utho Cloud, said, “India's increasing reliance on international data centres creates challenges that go far beyond technical concerns, impacting both economic priorities and strategic national interests. Today, many businesses continue to pay in dollars for cloud services that can increasingly be delivered domestically at a more cost-effective price, without compromising performance. This raises an important question—why should businesses depend on external systems when local capabilities are rapidly evolving?

Beyond cost, the risks are far more critical. Storing sensitive data outside national borders introduces regulatory challenges, latency issues, and uncertainties driven by global geopolitical developments. In today’s environment, data has become a vital strategic resource, and any disruption or restricted access during global conflicts can severely impact business continuity.

At the same time, this growing dependence risks positioning India as merely a consumption and reseller market, where digital services are used domestically but controlled externally. True digital sovereignty is not just about where servers are located, but also about who controls the technology stack, innovation roadmap, and long-term pricing power. If the foundational layer of cloud and AI continues to rely on global platforms, long-term control, innovation, and strategic security will remain offshore.

To address this, businesses must increasingly adopt sovereign cloud solutions that offer better control, faster access, and improved security. Investing in domestic cloud infrastructure not only reduces costs but also supports the development of a self-sufficient digital ecosystem aligned with India’s long-term growth, innovation, and resilience,” added Mr. Dhanda.

Indian businesses can gain multiple benefits from using sovereign cloud providers. First, domestic data storage ensures data security while maintaining compliance with local laws. It enables organizations to meet evolving data protection requirements and manage international data transfer restrictions effectively. Second, it improves operational efficiency by reducing latency, which is critical for real-time systems across industries such as fintech, e-commerce, and healthcare.

Adding further, organizations benefit from solutions tailored to local market needs. Sovereign cloud platforms provide more transparent pricing and reliable cost estimates. Local support systems further enhance efficiency by enabling faster issue resolution.

This shift is particularly significant for startups and growing enterprises. Affordable and scalable domestic infrastructure enables faster innovation without the burden of hidden costs or reliance on external support. Businesses can build and scale their products in a secure environment, without worrying about infrastructure-related challenges.

Dr. Kanishk Agrawal, CTO at Judge Group India, has flagged concerns over Indian companies relying on offshore data centres, warning of potential risks to business and customer data. He said "Companies in India face risk to their data about their business, company, and their customers due to use of offshore data centers. Storing their company data in another country, whether for compliance with regulations or due to geopolitical disruptions, can make companies' regulatory environment more difficult, raise the cost of doing business thru delays in migrating to/processing off-shore digital service providers and other factors that can slow or suspend digital services to their customers while at the same time keep from being able to scale and be more innovative. Therefore, investing in developing a strong domestic data infrastructure will also empower Indian companies to retain greater control of their data, be more secure and grow faster, helping these companies to continue to compete more effectively in a global economy driven by data".

While India’s digital journey has been supported by foreign cloud providers, the country must now develop independent systems for its next phase of growth. Adopting sovereign cloud infrastructure will reduce dependence on external systems, enhance security, and strengthen long-term resilience. To sustain its position as a global digital innovation leader, India must build and control its own cloud ecosystem.

Source: ZeeNews
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