Just like the rest of the world, India too is excited about AI and its various applications, especially GenAI. Indian businesses have shown an appetite for AI adoption, however, when it comes to the maturity of adoption, it appears that they are yet to fully harness AI’s potential.
Boston Consulting Group (BCG)’s AI Radar global survey of 1,803 C-level executives across 19 markets and 12 industries revealed that 71 percent of Indian companies have plans to invest up to US$ 25 million into AI, and another 15 percent plan to invest between US$ 25 – 50 million into it. The survey findings published in BCG’s report titled From Potential to Profit: Closing the AI Impact Gap further reveal that 34 percent see AI agents playing a central or contemporary role in 2025, while a further 36 percent are exploring the possibility.
“India has not only embraced AI but is rapidly emerging as a global leader in its adoption. Recent data indicates that India is at the forefront of AI implementation, alongside countries like the UAE,” says Rachit Mohan, APAC Lead – Data Center Leasing, and India Lead – Data Center Transactions, JLL.
Shedding light on sectoral trends in AI adoption, he says, “The financial services sector is leveraging AI for automated loan processing and fraud detection, while in healthcare, genomics is one of the main focuses along with AI-powered chatbots revolutionising initial medical consultations in multiple Indian languages. The energy sector is using AI to optimise energy usage and extend battery life in electric vehicles. Even the government sector is employing AI chatbots for citizen grievance redressal.”
India’s Data Centers getting ready for AI
Meanwhile, India’s digital infrastructure industry has been quietly preparing the groundwork necessary to support the impending tsunami of AI workloads.
“We are creating our data center designs on AI-enabled architecture,” says Surajit Chatterjee, Managing Director, Data Center India, CapitaLand Investment. “That means tomorrow, when the chips or CBUs enter the server rack, our network, operations, and design are already optimised to support these advanced technologies seamlessly. This proactive approach ensures that we remain at the forefront of innovation, ready to meet the demands of AI-driven workloads and deliver exceptional value to our customers.”
Over the last few years, India has been attracting investments into AI-related digital infrastructure development from both domestic and global players. Many AI-ready data centers have been planned or are in various stages of development across India. These range from the 80MW AI-dedicated facility that RackBank Datacenters is building in Indore in Madhya Pradesh to the 1GW AI-ready data center Reliance plans to build in Jamnagar in Gujarat. At Davos this year, Sify Technologies announced a US$5 billion investment to expand data hubs, add AI ops and GPUs. So, India is getting ready to fully embrace AI.
“We are projecting an addition of hundreds of megawatts of data center capacity in India over the next four years, primarily driven by AI,” says JLL’s Rachit Mohan, and goes on to share trends vis-à-vis training and inference data centers. “For large-scale AI model training, which isn’t latency-sensitive, we are seeing significant investments in hyperscale and colocation data centers. According to JLL research, the industry has expanded 2.5 times over the past four and half years (2019-H1 2024) at a 24 percent CAGR,” he says.
“On the other hand, AI inference, which often requires real-time data processing, is driving a trend towards edge data centres located closer to data sources. This is particularly crucial for applications like autonomous driving or high-frequency trading. The growth in this sector is substantial, with an expected addition of 604MW capacity in the next two and a half years.”
However, in terms of AI maturity, there has only been a marginal improvement over the last few years. Is this because of some systemic impediments, or is India just being cautiously optimistic about embracing AI?
Turns out, it’s a little bit of both.
AI Adoption Maturity: What do the numbers say?
According to the recently released AI Adoption Index 2.0 Report by the National Association of Software and Services Companies (NASSCOM) and Ernst & Young (EY), the Indian AI market is set to grow at a 25 – 35 percent Compounded Average Growth Rate (CAGR) through 2027, with the lion’s share from AI software and services, and Generative AI. The report, however, finds that India’s AI adoption has increased only marginally, with its index rising from 2.45 in 2022 to 2.47 in 2024.
The report is based on a survey of 500 companies and finds that 87 percent of the Indian enterprises are in the middle stages of AI maturity – Enthusiast and Expert – with 45 percent at the Expert stage. This was mainly due to a “lack of alignment of AI outcomes with business goals,” something that is “crucial to demonstrate PoC (Proof of Concept) success, quickly move to production, and plan for scalability.” It further found that there was an “inconsistent supply of standardised, compliant, and quality data.” Then there was the dearth of a skilled AI workforce, with only 13 percent of the respondents having a dedicated AI team.
If we look at the sectoral break up, Manufacturing, Telecom and Media & Entertainment have shown greater AI adoption than sectors like Banking Financial Services & Insurance (BFSI), healthcare, or even Energy and Utilities (E&U). But on a positive note, the same report finds that 60 percent of the respondents in the latter three sectors were also making it a priority to reskill their existing non-AI workforce.
What are Indian digital infrastructure business leaders saying?
Some of the most respected business leaders from India’s thriving cloud and data center industry are being cautiously optimistic, while being acutely aware of the inevitability of AI, and the consequences of ignoring it.
“We still don’t have real data as to how AI has contributed to growth. We expect growth from AI deployments, but the rubber is yet to hit the road,” says Vinod Javur, COO, Digital Edge DC. He compares the AI boom to an “apple in a transparent jar” scenario. “You can see it, but you can’t eat it. But you can’t ignore the apple. You hope that it will come out of the jar one day, and you can eat it. So, you are preparing. If you don’t prepare, someone else will open the jar and eat the apple,” he says.
Some other business veterans encourage potential adopters to first think things through, and gain clarity of purpose.
“Everybody wants to join the AI bandwagon, but you need to understand first what you are doing, what problem you are solving,” advises Kalyan Muppaneni, Founder & CEO, Pi Datacenters. “What are the use cases, what are the models, what business problem will the AI implementation solve, will you have a return on investment?” are some questions he advises business leaders to ask themselves. Muppaneni feels that AI is a journey. “It isn’t something everyone will implement over the next 12 or 24 months. I think it’s an evolution that will take place over the next ten years,” he says.
But the private sector cannot do it alone. The world over, we have seen examples of governments playing a proactive role in shaping the digital futures of their countries. Now, let’s have a look at what the Indian administration is doing to create an environment conducive for AI to thrive.
Government support for AI adoption
Indian Prime Minister Narendra Modi has held meetings with top technology leaders such as Nvidia founder and CEO Jensen Huang, Google CEO Sundar Pichai, Microsoft chairman and CEO Satya Nadella, among others.
Then there is the IndiaAI Mission, an initiative of India’s Ministry of Electronics and Information Technology (MEITy). This Mission “aims to build a comprehensive ecosystem that fosters AI innovation by democratising computing access, enhancing data quality, developing indigenous AI capabilities, attracting top AI talent, enabling industry collaboration, providing startup risk capital, ensuring socially impactful AI projects, and promoting ethical AI.”
In March 2024, the Indian Parliament approved Rs 10,300 crores for supporting projects under the IndiaAI Mission. These include improving India’s compute capacity by deploying over 10,000 Graphics Processing Units (GPUs) through strategic public-private collaborations. Other initiatives under the mission include setting up the IndiaAI Innovation Centre (IAIC), an academic institution that will aim at streamlined implementation and retention of top research talent. Funds approved by the Cabinet will also enable IAIC to develop and deploy foundational models, with a specific emphasis on indigenous Large Multimodal Models (LMMs) and domain-specific models, leveraging Edge and distributed computing for optimal efficiency.
So, how has this translated into actual investments or developments on the ground? Has it empowered domestic players adequately? Are global tech majors making a beeline for India the way they are looking at say, East Asia and the Middle East?
International interest in India’s AI landscape
In March 2024, NVIDIA delivered 4,000 H100 Tensor Core GPUs to India’s Yotta Data Services, the data center business of the Hiranandani Group. Yotta will use these chips to power ShaktiCloud, its comprehensive AI platform that aims to empower users to build, train, and deploy AI models seamlessly.
In September 2024, G42, a UAE-based technology holding group, announced that it will soon launch NANDA, a Hindi Large Language Model (LLM). NANDA is a 13-billion parameter model trained on approximately 2.13 trillion tokens of language datasets, and it could offer over half a billion Hindi language speakers the opportunity to harness the potential of generative AI.
Google already has ongoing investments in AI in India. The plans include partnerships with various state governments for the use of AI solutions in sectors like agriculture, healthcare, and education.
In January 2025, Microsoft announced an investment of UD$3 billion into Cloud and AI infrastructure in India. The plan involves the establishment of new data centers, as well as training 10 million Indians in AI skills over the next five years.
With AI-ready digital infrastructure being developed, it appears that AI adoption is likely to pick up pace in the near future in India.
***This article first appeared in the most recent issue of W.Media’s Cloud & Datacenters magazine. Click the image below to download a complimentary copy:
