LowV Technology Geopolitics & AI21 September 2026, Monday
Microsoft: 70% of India's data centre capacity will be built in 5–6 years; JLL expects growth from 1.6 GW to 6 GW by 2029
Puneet Chandok, President of Microsoft India and South Asia, told the Microsoft AI Infrastructure Summit in New Delhi that more than 70% of the country's data centre capacity will be built within 5–6 years. According to JLL, capacity will rise from 1.6 GW in mid-2026 to 6 GW in 2029.
According to IBC World News and Compsmag, Chandok, speaking on the sidelines of the summit on 21 September, attributed the growth to AI inference workloads, local data storage requirements in regulated sectors and enterprise cloud demand. He stressed that new facilities should be built as green infrastructure with a net-zero water consumption target; Compsmag writes that Hyderabad is positioned as one of the leading hubs for this investment. Chandok's remarks included no investment amount or megawatt target; a new Microsoft investment commitment to India could not be verified.
JLL's mid-2026 report puts figures on the picture: India's data centre capacity stood at 1.6 GW in mid-2026 and is expected to reach 6 GW in 2029. Absorption in the first half of 2026 was 101 MW, more than 20% above the 3-year average, and 82% of it came from hyperscale cloud companies; in the same period 85 MW of new supply came online, about half in Mumbai and half in Chennai. Global hyperscalers have committed more than 50 billion dollars to 1.4 GW of their own facilities by 2029. The budget granted foreign cloud providers a tax holiday until 2047; penalties for breaches of the Digital Personal Data Protection Act can reach 250 crore rupees.
Talay assessment
Bottom line
With local data storage requirements and a tax holiday running to 2047, India is becoming one of the main markets where US hyperscalers are locating AI infrastructure outside China. The expectation that capacity will roughly quadruple in 3 years makes the question of whether electricity and water supply can keep up the real constraint.
Likely effects
- Geopolitics of AI infrastructurePositive6 months+
US cloud companies' commitments of more than 50 billion dollars for 1.4 GW of their own capacity bind India more tightly to the US technology ecosystem.
- Energy and waterNegative1–6 months
The rise from 1.6 GW to 6 GW puts additional strain on the power grid and cooling water in Mumbai and Chennai; the net-zero water target raises costs.
- Türkiye's data centre competitionUncertain6 months+
Incentives such as tax holidays and local data rules are sharpening competition among countries seeking hyperscale investment; they also set a benchmark for Türkiye's regional data centre ambitions.
Possibilities, ranked
- 1Expansion proceeds on schedule55%
Hyperscale investment continues and annual absorption in 2026 keeps the pace of the first half.
Watch: JLL's year-end 2026 absorption and supply data for India
- 2Power bottleneck slows it35%
Delays in grid connection and energy supply hold back new capacity coming online.
Watch: Grid connection approvals for data centres in Mumbai and Chennai and state electricity policies
- 3Demand shock10%
A global slowdown in the AI investment cycle leads to commitments being postponed.
Watch: Quarterly capital expenditure guidance from US hyperscalers
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Capacity (mid-2026)▲ 1.6 GW
- Expected capacity (2029)▲ 6 GW
- Hyperscaler commitments▲ over $50 billion