Key Points
US technology companies are delaying their decision to lease large data centers in India. This is volatile due to the sourness of the recent trade relations between New Delhi and Washington. Alok Bajpai, managing director of India at NTT Global Data Centre, says that orders from large hyperscalar companies, or data centers that consume huge amounts of computing power are “still in the pipeline and have not yet signed it.” Hyperscalers, including Amazon, Microsoft and Google, currently account for around 30% of India’s data center demand, and are expected to rise to 35%, according to data from stock consulting firm Anarock Capital. The real estate consultant, who spoke on condition of anonymity due to business sensitivity, said Hyperschool may reconsider its plans in the next three months, while new transactions at the data center have been pending for more than two months. Customs pass-throughs, legal changes and gradual ability clauses have quietly become standard. Argus Partners’ partner Jitendra Soni has seen trade relations between the two countries worsen in the past two months. In August, the US raised its tax to 50% after imposing a 25% tariff on goods from India, citing India’s purchase of Russian oil. It was then followed by a new “one-time” visa fee for fresh H-1B visa applications announced on September 21, announced by US President Donald Trump. “The new US tariffs on Indian exports have made the global supply chain unstable and equipment and input costs difficult,” said Jitendra Soni, partner in technology and data privacy practices at the law firm Argus Partner. Despite tensions with Washington, multiple industry estimates show that India’s data center capacity will almost triple over the next five years, from 1.2 gigawatts to 3.5 gigawatts by 2030 by 2030, according to estimates. Demand is being driven by reduced costs and increased demand for e-commerce services, cloud infrastructure, and AI workloads. However, uncertainty is manifested in data center negotiations that “customer pass-through, legal changes and gradual capacity provisions have become quietly standardized.” The graphics processing unit (a shortage of GPUs) had already slowed the expansion. The latest trade frictions have added another layer of attention. “The hyperscaler hasn’t disappeared, but it’s just paused,” the real estate consultant said. They reportedly have an interest in setting up large data centers in India. Google includes Openai, who has been discussing with Andhra Pradesh government to develop a 1 Gigawatt facility and is looking for partners for similar projects. “The fundamental appeal of India is not darkened and is persuasive,” Soni said. “But the deal is closing more slowly, making people who endure the next global shock much more lawyers.”
