India’s digital journey has been nothing short of remarkable, driven by a robust Digital Public Infrastructure (DPI) framework known as the India Stack. Over the past decade, the government, in collaboration with public and private entities, has built this digital ecosystem to empower citizens, improve governance, and foster economic growth.
The India Stack is a set of open APIs and platforms that provide a foundation for large-scale public service delivery and innovation. It enables governments, businesses, startups, and developers to leverage technology to offer services to millions of Indians, especially those in underserved areas.
The India Stack is viewed as a layered infrastructure, addressing identity, payments, data, and services.
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Four Pillars of the Digital Stack
The four layers of India Stack include:
- Presenceless Layer. Aadhaar enables remote authentication, providing a digital ID that requires only a 12-digit number and a fingerprint or iris scan, eliminating the need for physical documents. It prevents duplicate and fake identities.
- Paperless Layer. Reliance on digital records, using Aadhaar eKYC, eSign, and Digital Locker. It enables secure digital storage and retrieval, creating a paperless system for verifying and accessing documents anytime, on any device.
- Cashless Layer. Led by NPCI, this aims to universalise digital payments. UPI enables instant, secure money transfers between bank accounts using a simple Virtual Payment Address (VPA), moving transactions into the digital age for transparency and ease of use.
- Consent Layer. Enables secure, user-controlled data sharing through electronic consent, allowing data to flow freely. The Account Aggregator ecosystem benefits most, with AA acting as a thin data aggregation layer between Financial Information Providers (FIPs) and Financial Information Users (FIUs).
The Impact of the India Stack
The India Stack has played a pivotal role in the country’s rapid digitalisation:
Financial Inclusion. Aadhaar-enabled payment systems (AePS) and UPI have significantly expanded financial access, increasing inclusion from 25% in 2008 to 80% in 2024, particularly benefiting rural and underserved communities.
Boost to Digital Payments. The India Stack has fuelled exponential growth in digital payments, with UPI processing 10 billion monthly transactions. This has driven the rise of digital wallets, fintech platforms, and digitisation of small businesses.
Better Government Services. Aadhaar authentication has improved the delivery of government schemes like Direct Benefit Transfers (DBTs), Public Distribution System (PDS), and pensions, ensuring transparency and reducing leakages.
The India Stack: A Catalyst for Startup Success
The India Stack is fuelling startup innovation by providing a robust digital infrastructure. It enables entrepreneurs to build services like digital payments, eCommerce, and financial solutions for underserved populations. Platforms such as Aadhaar and UPI have paved the way for businesses to offer secure, seamless transactions, allowing startups like Paytm and BharatPe to thrive. These innovations are driving financial inclusion, empowering rural entrepreneurs, and creating opportunities in sectors like lending and healthtech, supported by global and domestic investments.
From Local Success to Global Inspiration
The impact of the India Stack’s success is being felt worldwide. Global giants such as Google Pay, WhatsApp, and Amazon Pay are drawing inspiration from it to enhance their global payment systems. Alphabet CEO Sundar Pichai plans to apply lessons from Google Pay’s Indian experience to other markets.
While India Stack has achieved significant success, there is still room for improvement. Strengthening data privacy and security is crucial as personal data collection continues to expand. The Digital Personal Data Protection Act aims to address these issues, but balancing innovation with privacy protection remains a challenge.
Bridging the digital divide by expanding Internet access and improving digital literacy, especially for rural and older populations, is key to ensuring that everyone can benefit from the India Stack’s advantages.
India’s digital economy is on a meteoric rise, expected to reach USD 1 trillion by 2025. This surge in digital activity is fuelling the rapid expansion of its data centre market, positioning the country as a global player. With a projected market value of USD 4.5 billion by 2025, India’s data centre industry is set to surpass traditional regional hubs like Malaysia, Hong Kong, and Singapore.
This growth is driven by factors such as the proliferation of smartphones, internet connectivity, and digital services, generating massive amounts of data that need storage and processing. Government initiatives like Digital India and the National e-Governance Plan have promoted digitalisation, while favourable market conditions, including cost-effective infrastructure, skilled talent, and a large domestic market, make India an attractive destination for data centre investments.
As companies continue to invest, India is solidifying its role as a critical hub for Asia’s digital revolution, driving economic development and creating new opportunities for innovation and job creation.
What is Fuelling India’s Data Centre Growth?
India’s data centre industry is experiencing rapid growth in 2024, driven by a combination of strategic advantages and increasing demand. The country’s abundance of land and skilled workforce are key factors contributing to this boom.
- Digitisation push. The digital revolution is fueling the need for more sophisticated data centre infrastructure. The rise of social media, online gaming, and streaming apps has created a surge in demand for faster networks, better data storage options, and increased data centre services.
- Internet and mobile penetration. With 1.1 billion mobile phone subscribers, Indians use an average of 8.3 GB of data per month. As more people come online, businesses need to expand their data infrastructure to handle increased traffic, enhance service delivery, and support a growing digital economy.
- Increasing tech adoption. India’s AI market is projected to reach around USD 17 billion by 2027. As businesses integrate AI, IoT, cloud, and other technologies, data centres will become instrumental in supporting the vast computational and storage requirements.
- Government & regulatory measures. Apart from India being one of the world’s largest data consumption economies, government initiatives have also accelerated the ‘data based’ environment in the country. Additionally, states like Maharashtra, Karnataka, and Tamil Nadu have implemented favourable real estate policies that reduce the costs of setting up data centres.
A Growing Network of Hubs
India’s data centre landscape is rapidly evolving, with major cities and emerging hotspots vying for a piece of the pie.
Mumbai-Navi Mumbai remains the undisputed leader, boasting a combined 39 data centres. Its strategic location with excellent submarine cable connectivity to Europe and Southeast Asia makes it a prime destination for global and domestic players.
Bangalore, India’s IT capital, is not far behind with 29 data centres. The city’s thriving tech ecosystem and skilled talent pool make it an attractive option for businesses looking to set up data centres.
Chennai, located on the east coast, has emerged as a crucial hub with 17 data centres. Its proximity to Southeast Asia and growing digital economy make it a strategic location. The Delhi-NCR region also plays a significant role, with 27 data centres serving the capital and surrounding areas.
Smaller cities like Pune, Jaipur, and Patna are rapidly emerging as data centre hotspots. As businesses seek to serve a growing but distributed user base across India, these cities offer more cost-effective options. Additionally, the rise of edge data centres in these smaller cities is further decentralising the data centre landscape.
A Competitive Market
India ranks 13th globally in the number of operational data centres, with 138 facilities in operation and an additional 45 expected to be completed by the end of 2025. Key initiatives include:
- AWS. AWS is investing USD 12.7 billion to establish four new data centres over the next two years.
- Meta. Meta is set to build a small data centre, potentially focused on cache with a 10-20 MW capacity.
- AdaniConnex. In partnership with EdgeConneX, AdaniConnex aims to develop a 1 GW network of hyperscale data centres over the next decade, all powered by 100% renewable energy.
- Google. Google is set to build an 80-storey data centre by 2025 and is in advanced talks to acquire a 22.5-acre land parcel for its first captive data centre.
- NTT. NTT is investing USD 241 million in a data campus, which will feature three data centres.
Data Centres: Driving Digital India’s Success
The Digital India initiative has transformed government services through improved online infrastructure and increased connectivity. Data centres play a pivotal role in supporting this vision by managing, storing, and processing the vast amounts of data that power essential services like Aadhaar and BharatNet.
Aadhaar, India’s biometric ID system, relies heavily on data centres to store and process biometric information, enabling seamless identification and authentication. BharatNet, the government’s ambitious project to connect rural areas with high-speed internet, also depends on data centres to provide the necessary infrastructure and support.
The impact of data centres on India’s digital transformation is far-reaching. Here are some key areas where data centres have made a significant contribution:
- Enabling Remote Work and Education. Data centres have been instrumental in supporting the surge in remote work and online learning during the pandemic. By providing the necessary infrastructure and connectivity, data centres have ensured business continuity and uninterrupted education.
- Fostering Start-Up Innovation. Data centres provide the essential infrastructure for start-ups to thrive. By offering reliable and scalable computing resources, data centres enable rapid growth and innovation, contributing to the expansion of India’s SaaS market.
- Supporting Government Services. Data centres underpin key government initiatives, including e-governance platforms and digital identity systems. They enhance the accessibility, transparency, and efficiency of government services, bridging the urban-rural divide and improving public service delivery.
Securing India’s Data Centre Future
Data centres are the backbone of India’s digital transformation, fuelling economic growth, government services, innovation, remote work, and technological progress. The Indian government’s ambitious plan to invest over USD 1 billion in hyperscale data centres over the next five years underscores the country’s commitment to building a robust digital infrastructure.
To secure the long-term success of India’s data centre industry, alignment with global standards and strategic investment are crucial. Prioritising reliability, efficiency, and sustainability will attract global providers and position India as a prime destination for digital infrastructure investments. Addressing challenges like legacy upgrades, modernisation, and cybersecurity risks will require collaboration across stakeholders, with government support and technological innovation playing key roles.
A unified effort from central and state governments is vital to enhance competitiveness. By fostering a favourable regulatory environment and offering incentives, the government can accelerate the development of world-class data centres. As India advances digitally, data centres will be instrumental in driving economic growth, improving quality of life, and solidifying India’s status as a global digital leader.
