It is easy to be distracted by the headline figure. Reliance’s joint venture, Digital Connexion, announcing an $11 billion plan for a data centre in Andhra Pradesh certainly catches the eye. Along with Larsen & Toubro’s own $2.5 billion commitment, it feels like a sudden, monumental bet on India’s digital future. But to see this merely as a large number is to miss the far more interesting strategic realignment happening beneath the surface.
This isn’t just about building more data centres. This is about who owns the digital foundations of a nation, and it marks a fundamental shift in how the business of AI will be conducted. The key question isn’t if India needs more computing power, but who will provide the power for that compute?
The New Digital Landlords
For years, the story of the cloud was one of dematerialisation. Companies offloaded their servers and IT needs to the big three: Amazon Web Services, Microsoft Azure, and Google Cloud. The infrastructure became someone else’s problem. Yet, AI is reversing this abstraction. The sheer computational hunger of modern AI models has made the physical world—land, power, cooling—the primary bottleneck once again.
Think of it like this: if AI models are the new engines of economic growth, then hyperscale facilities are the factories that house them. But these are factories with an insatiable appetite for electricity. As Greyhound Research’s Sanchit Vir Gogia correctly stated in an analysis for Livemint, “in the AI era, compute is constrained less by chip availability and more by electricity, cooling, and interconnects”.
This changes the game entirely. The business of providing AI infrastructure investment stops looking like a tech venture and starts looking like a utilities-style business. And who excels at the utilities business in India? Not tech start-ups, but the industrial-scale conglomerates.
India’s Sovereignty and Scale Strategy
The recent flurry of investment announcements, totalling nearly $60 billion this year from players like Reliance, Adani Group, and Tata, makes perfect sense when you consider two powerful forces acting in concert.
First, data sovereignty. India, like many other nations, is firming up rules that require citizen data to be stored and processed within its borders. This simple policy move transforms global cloud giants from monopolistic providers into tenants. They must have a physical presence in India to serve the market, which means they need to rent space from local landlords.
Second, scale and energy. India’s current data centre capacity stands at a modest 1.4GW, according to S&P Global. The plans laid out by Digital Connexion (a joint venture between Reliance, Brookfield, and Digital Realty) for a 1-gigawatt facility in Visakhapatnam, and L&T’s plan for 300MW across five centres, are on a completely different scale.
This isn’t just ambition; it’s a strategic necessity driven by the power equation. A company like Reliance isn’t just a telecom operator; it’s one of India’s largest energy producers. It can build, own, and operate the renewable power sources needed to run these gigawatt-scale data centres at a cost no one else can match. They are vertically integrating the physical supply chain of AI: the land, the green power, the fibre-optic connections, and the building itself. This creates an enormous competitive moat.
Why Edge and Efficiency are Part of the Core Plan
While these colossal data centres form the core of the strategy, the conversation quickly turns to edge computing. With torrents of data being generated by phones, cars, and factories across a subcontinent, sending everything back to a central hub in Visakhapatnam or Chennai becomes wildly inefficient.
Edge computing acts as a network of local substations, processing data closer to its point of origin. This reduces latency, saves bandwidth, and makes real-time AI applications feasible. For the new digital landlords, building out an edge network is the logical next step after securing the hyperscale core. It extends their infrastructural dominance from the city-sized data campus right to the street corner.
This is also where energy efficiency becomes critical. When you are operating at the gigawatt scale, even marginal improvements in power usage translate into colossal cost savings. Building these hyperscale facilities from the ground up allows companies to integrate cooling technologies and renewable energy sources from day one. This isn’t just a nod to sustainability; it is a hard-nosed financial decision that locks in a long-term cost advantage, making their “rent” more attractive to the likes of Google and Amazon. This focus on energy efficiency is a key pillar of modern AI infrastructure investment.
The Future of Emerging Markets Tech is Being Built Now
What we are witnessing in India is a blueprint for how emerging markets tech could evolve globally. Rather than ceding the foundational layer of their digital economy to foreign cloud providers, national industrial champions are taking control of the physical assets.
The rise of Visakhapatnam as a data hub, attracting over $26 billion in commitments, shows this isn’t a strategy confined to the usual megacities. It is a deliberate, geographically distributed plan to build a national grid for data.
The ramifications are significant. Global tech giants, once the undisputed kings of the cloud, will increasingly operate as anchor tenants in infrastructure owned by national players. This rebalances the power dynamic considerably. The colossal investments from Reliance and others aren’t just a bet on AI; they are a bet that in the 21st century, controlling the power grid for data is more important than owning the applications that run on it.
What do you think? Is this move by Indian conglomerates a masterstroke in securing national digital sovereignty, or does it risk creating new domestic monopolies? Will we see a similar pattern play out in Southeast Asia, Africa, and Latin America? The land grab for the digital world is well and truly on.
