Data Centres – The war could trigger a fresh shift towards India

In the US-Iran war, Iran did not just hit the oil and gas facilities in the Middle East. It also targeted some of the mega data centres located in UAE and Bahrain owned by companies like Oracle and AWS. The attacks were a sort of double whammy.

Hitting data centres in the Middle East

Unlike the 2025 war, when Iran was grossly underprepared, this time around they had planned their response down to the minutest detail. After targeting the oil and gas facilities in the Middle East, Iran turned its attention to mega US data centres. For instance, it targeted data centres of Oracle and AWS located in UAE and Bahrain causing significant damage. In the case of AWS, the decision was immediate; shift the data centre capacity to India. The US companies realized that the infrastructure power AI and Cloud in the Middle East was no longer secure. Not surprisingly, Indian data centre companies like Yotta, Nxtra, CtrlS, and NTT are seeing a surge in inquiries from global companies.

Why is the data centre demand moving to India?

There are several reasons. India has a clear advantage in pricing. For example, building a 100 MW AI capacity in India would cost around $6 million, while the same facility in Singapore would cost $12 million. In short, India gets them double the capacity at the same cost. Then there are the tax breaks that the government has offered to data centre companies that will extend right up to 2047. For Hyperscalers, who need huge data centre capacity, costs matter a lot, especially when they can get twice the capacity for the same price. India’s public cloud market is slated to grow from $14 billion in 2024 to $35 billion in 2029; a CAGR of 22%. That is the big draw.

Data centre proximity versus data centre remoteness

For a long time, the logic of a data centre was to have it in proximity so it gives greater control over data and quicker access. However, the Gulf war has changed that perception. The new thinking is that by having the data centres at a remote place, it derisks the business model of the company. While the critical data for regular use would still be maintained in a proximate server, the back-up data is likely to be increasingly located at remote centres. Not surprisingly, AWS is moving aggressively towards India. After all, they can get scale and expertise, at almost half the cost.

Big global money is flowing into Indian data centres

Most of the global tech companies have committed their billions to Indian data centres. Google has committed $15 billion, AWS has committed $8.3 billion, and Microsoft has also committed $3 billion to AI data centres in India. Data centre orders worth $50 billion will be farmed out to Indian companies, although most of the big names are still unlisted. Even after the war ends, there would be a greater effort on the part of these global companies to farm out more of the data centre business to countries like India. After all, it is better to have your data backed up far away, instead of having it vulnerable. That is the argument that most global companies are veering towards.