India’s rapidly expanding data centre industry may have strategic importance but is unlikely to significantly alter the country’s overall economic growth trajectory in the near term, according to a Business Standard report citing Moody’s Ratings.
The rating agency estimates that data centre investments will contribute around 0.10% of India’s nominal GDP in 2025 during the construction phase.
Additional investments in power generation required to support these facilities could contribute another 0.03%. Even after becoming fully operational, the sector’s total contribution is expected to remain around 0.13% of GDP by 2030.
Data centres bring investment but limited jobs
Moody’s said that while the planned investments and construction activity are large in absolute terms, they remain relatively small compared with the size of India’s economy.
The agency noted that data centres could create broader economic benefits only if they encourage local supplier development, increase cloud adoption, expand digital services exports and strengthen the technology ecosystem.
Employment generation from the sector is also expected to remain limited due to the highly capital-intensive nature of data centres. Construction-related jobs are projected to account for only a small share of overall industrial employment, while permanent jobs are likely to be concentrated in specialised technical roles.
Power supply is not expected to become a major nationwide challenge, with data centres estimated to consume less than 5% of India’s total electricity demand by 2030. However, ensuring reliable transmission and distribution infrastructure around major data centre hubs such as Mumbai will remain important.
Import dependence remains a challenge
A key limitation for India’s data centre sector is its dependence on imported equipment. A large portion of investment is directed towards servers, semiconductors, cooling systems and specialised technology hardware sourced from overseas.
Moody’s said rising imports linked to data centre development have been visible since 2023, particularly in India and other Asian markets such as Thailand and Vietnam. This high import intensity reduces the domestic economic value created by the sector.
India has nevertheless attracted significant interest from global technology companies and domestic businesses. Announced investments in data centre capacity have crossed $250 billion, with major projects including Google-Adani’s $15 billion data centre initiative in Visakhapatnam and Tata Consultancy Services’ $7 billion HyperVault project.
To encourage growth, the government has also introduced incentives, including a tax holiday until 2047 for foreign cloud service providers using Indian data centres. However, Moody’s said the sector’s long-term economic impact will depend on whether these investments create a wider digital ecosystem beyond infrastructure development.
