India is projected to require an additional 45–50 million square feet of real estate and 40–45 terawatt-hours (TWh) of power by 2030 to meet the fast-growing demand for data centres driven by advancements in artificial intelligence (AI), according to a new report by Deloitte.

The report titled “Attracting AI Data Centre Infrastructure Investment in India” emphasizes India’s competitive edge—affordable operational costs, a push for renewable energy adoption, and a strategically advantageous location. However, it also warns that realizing the country’s ambitions to become a global AI leader depends on closing significant gaps in infrastructure, skilled workforce, and policy frameworks.

Deloitte outlines six foundational elements for building a robust AI ecosystem: real estate availability, energy and utilities, connectivity, computing infrastructure, talent, and supportive policies. To accelerate progress, the report recommends several targeted measures:

• Introducing a distinct category for data centres in the National Building Code.
• Classifying data centres as essential services under the Essential Services Maintenance Act.
• Establishing dedicated facilitation units to streamline and fast-track approval processes.

In addition, the report calls for updated regulations to reflect better operational realities, such as amending data access provisions under the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, and exempting data centres from specific surveillance requirements outlined in the Telecommunication Act, 2023.  The report further suggests implementing “safe harbour” provisions for data hosting providers and promoting the creation of data embassies to attract greater investment and establish India as a key player in global data infrastructure.

However, Deloitte cautions that this rapid expansion could strain the nation’s power grid considerably, necessitating immediate investments in power generation, infrastructure upgrades, and improved integration of renewable energy sources. Despite progress, India still contends with network connectivity challenges, including limited fibre optic reach in rural areas, inconsistent high-speed internet, and latency issues, which could hinder optimal data centre deployment. “Focusing on scalable computing systems, efficient energy and cooling infrastructure, and a more agile policy environment will be critical to positioning India as a future hub for AI-driven data centres,” said Neha Aggarwal, Partner at Deloitte India.

Key recommendations from the report include:

• • Policy Reforms: Establishing a distinct category for data centers in the National Building Code and recognizing them under the Essential Services Maintenance Act to facilitate specialized infrastructure development.
  • Streamlined Approvals: Creating data center facilitation units to expedite and simplify the approval processes, thereby accelerating deployment.
  • Regulatory Adjustments: Amending data access provisions under the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, to align with data centers\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\’ operational realities, and excluding them from specific surveillance scopes under the Telecommunication Act, 2023.
  • Investment Incentives: Implementing safe harbor rules for data hosting service providers and establishing data embassies to attract investments and foster growth in the data center sector.

The report also cautions that the rapid expansion of data centers will exert significant pressure on India\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\’s power grid. Addressing this challenge will require urgent investments to enhance power generation capacity, upgrade existing infrastructure, and integrate renewable energy sources effectively.

By undertaking these strategic initiatives, India can position itself at the forefront of the global AI revolution, ensuring sustainable growth and technological advancement in the coming years.