Data Centres Newsletter - COE Chakra
Data Centres Newsletter
Public–Private Synergy: Building India’s Data Infrastructure Ecosystem
March, 2026
Ayesha Conrad Fernandes, Data Centres, SBI CHAKRA
India’s data economy is expanding at an unprecedented pace. From digital payments and e-governance to cloud computing and AI-led businesses, the country is generating and processing more data than ever before. This exponential growth has created a parallel surge in demand for data centre infrastructure—the physical backbone of the digital economy.
Recognising its strategic importance, the Government of India has formally recognized data centres as part of the Harmonized Master List of Infrastructure sub-sectors in 2022, granting them infrastructure status and introducing policy incentives across several states. In this evolving landscape, public–private collaboration is emerging as a vital enabler to accelerate investments, build institutional capabilities, and create a sustainable digital infrastructure ecosystem.
Why Collaboration Matters
Data centres are complex assets that sit at the intersection of power, connectivity, real estate, and finance. Their viability depends on the seamless integration of multiple systems—reliable power supply, high-speed fibre connectivity, strategic land availability, and long-term financing.
No single stakeholder can deliver all these components in isolation. Therefore, synergetic collaboration between the public and private sectors is essential to align investments, mitigate risks, and accelerate project execution. The convergence of government policy, financial innovation, and industry expertise is what will ultimately determine the sector’s success.
Push for an integrated data centre growth ecosystem
While traditional PPP frameworks have shaped roads and power sectors, data centre development demands new partnership models that combine policy facilitation with private execution capacity. Emerging examples include:
1. Data Centre Parks and Economic Zones:
States such as Maharashtra, Tamil Nadu, and Uttar Pradesh have launched dedicated data centre park policies offering fiscal incentives, plug-and-play infrastructure, and fast-track clearances. Public agencies provide land and utilities, while private developers invest in design, build, and operations.
2. Green Energy Integration:
Collaboration between data centre operators and state utilities or renewable energy companies enables the direct procurement of clean power. This helps reduce emissions while enhancing energy security.
3. Infrastructure Financing Partnerships:
Public sector banks and financial institutions are increasingly working with private investors and sovereign funds to finance large-scale data centres. Green bonds, ESG-linked loans, and blended finance models are supporting capital-efficient and sustainable growth.
4. Skill and Research Collaboration:
Recognising the need to develop a skilled digital talent pool in India, IIT Madras, in partnership with Vertiv, has recently introduced a certificate course on Data Centre Operations and Maintenance. This program aims to cultivate a skilled talent pool by providing participants with industry-specific knowledge and practical experience. The curriculum is tailored to the needs of India's evolving digital economy, covering essential topics such as data centre infrastructure, power and thermal management, remote monitoring, and predictive maintenance strategies, which are crucial for ensuring continuous uptime and peak operational efficiency in modern, "always-on" environments. Such initiatives reflect the growing academia–industry–finance collaboration, ensuring that India’s data infrastructure growth is supported by a skilled workforce.
The Bank’s Role in Strengthening the Ecosystem
Public sector banks occupy a strategic position in this collaborative framework. Beyond providing credit, they act as catalysts and enablers, connecting multiple stakeholders to accelerate the development of the data centre industry. Their contribution can include:
- Sector Enabler: Developing customised project appraisal frameworks that account for technology, uptime, and energy risks.
- Policy Partner: Working with government bodies to design the Data Centre Policy and financial incentives for new data centre investments.
- Green Finance Advocacy: Promoting sustainable financing by linking loan terms to renewable adoption and Power Usage Efficiency targets.
- Knowledge Hub: Through platforms like the Centre of Excellence for Sunrise Sectors, supporting research and knowledge dissemination, best-practice sharing, and staff capacity-building initiatives.
The data centre sector represents a cornerstone of India’s digital ambitions and a high-potential opportunity for financial institutions. Its successful expansion depends not just on investment, but on the strength of partnerships—between government, academia, industry, and financial institutions.
By enabling such synergy, public sector banks can play a transformative role in shaping India’s digital infrastructure ecosystem—ensuring that the growth of data centres is inclusive, sustainable, and future-ready.
Data Centers Sectoral Insights
India’s data center industry is undergoing a structural shift, propelled by growing digital adoption, regulatory clarity, and the accelerating demand for compute linked to artificial intelligence. As of 2025, installed co-location capacity stands at approximately 1.5 GW. This figure is expected to rise to over 6.5 GW by 2030, underpinned by sustained hyperscaler investments and continued demand from regulated enterprise segments. Capacity growth is geographically concentrated in Mumbai, Noida, Hyderabad and Chennai, supported by access to stable power, submarine cable landing points, and active state-level incentive frameworks.
Policy changes have created a favourable regulatory environment that is steering demand toward domestic, compliant infrastructure. The enforcement of the Digital Personal Data Protection Act (DPDA) and prior RBI directives on data localization have prompted enterprises to reassess infrastructure strategies. AI workloads are further intensifying demand for advanced computing environments, prompting a reconfiguration of data centre design. Rack density, power throughput, and thermal efficiency have become core performance benchmarks. Government-led initiatives, including the IndiaAI Mission, are accelerating investment in GPU clusters and hybrid compute platforms, reinforcing the urgency for scalable, AI-ready infrastructure. In parallel, the GOI has introduced a suite of policy measures to position the country as a global hub for data centres and digital infrastructure. The Union Budget 2026–27 reinforces this direction, notably through a proposed tax holiday for cloud and AI-driven services until 2047, aimed at providing long-term fiscal visibility and supporting a sustained, investment-conducive ecosystem.
These shifts are redefining the occupier landscape. Hyperscale cloud providers are leveraging a mix of leased and built capacity to optimize cost and control, with leasing used for rapid market entry and builds favoured for long-term economics. BFSI and ITeS enterprises are moving from legacy captive infrastructure to colocation formats, driven by regulatory compliance needs and cost rationalization. Meanwhile, digital-native firms are increasingly favouring hybrid cloud solutions that balance performance with capital efficiency. In response, operators such as STT GDC, NTT, Nxtra, Yotta, and CtrlS are scaling aggressively and differentiating through value-added services, renewable power integration, and AI-supportive data centre stacks. Emerging entrants in India include players such as AdaniConneX, Digital Connexion, Equinix, Sify,CapitalLand, RMZ Colt, L&T Vyoma and Reliance Jio.
Technology transitions are influencing both hardware and facility formats. Traditional tower-based servers are being replaced by rack-scale and multi-node architectures to accommodate dense computing loads. SSDs are becoming the dominant storage medium in enterprise deployments, supporting faster I/O and energy optimization. Legacy air cooling solutions are approaching their physical limits, particularly beyond 15 kW per rack, leading to early-stage adoption of direct-to-chip and immersion cooling. The sector also continues to face structural power challenges, with operators deploying battery storage, on-site generation, and redundancy systems. However, dependence on grid stability remains a constraint in Tier 1 cities.
As demand grows, the development model is becoming more capital intensive, requiring structured financing strategies aligned with global precedents. Best-in-class capital frameworks include debt service coverage thresholds, margin ratchets linked to energy efficiency metrics, and escrow-based cash flow management. Syndicated structures increasingly rely on fixed-price EPC contracts and anchor tenant commitments for a significant share of initial capacity.
India now ranks among the most compelling global markets for digital infrastructure deployment. A confluence of strong demand, policy stability, and rising institutional interest is shaping a deep pipeline of investible assets. For financial institutions, the opportunity lies in adopting an infrastructure-grade underwriting approach that emphasizes long-term cash flow stability, ESG alignment, and contractual safeguards. This requires disciplined avoidance of speculative builds with unclear demand. Priority should be placed on operator-led greenfield developments with clear tenant visibility, low energy intensity, and reliable grid access.
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Last Updated On : Saturday, 30-05-2026
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