Cummins India, CG Power, GE Vernova: Can India’s data centre sector outperform global rivals?

India’s data centre industry, according to analysts, is set to outpace its Asia-Pacific (APAC) peers as the country provides distinct opportunities for the sector amid surging demand for artificial intelligence (AI) and cloud computing.

While certain overlooked risks persist in India’s data centre expansion, overall sector momentum remains robust amid intensifying market competition.

Experts predict that the Indian data centre sector will benefit from low capital expenditures (capex), better tax frameworks, high demand, cheap land prices, and abundant power capacity additions in line with the country’s target to become a global hub for AI and cloud infrastructure.

Can India's data centre growth outperform global peers?

In a recent note, analysts at Japan-based leading investment firm Nomura said that the Indian data centre industry is expected to outperform APAC peers and grow at a compounded annual growth rate (CAGR) of 30% between the calendar year ended 2025 and 2030.

“Lower capex and favourable power economics will support attractive data centre returns,” said the analysts amid the country’s push for digital and cloud infrastructure and data centre demand.

The investment firm also predicts that robust demand, along with sustainable premium pricing trends, is positioned to unlock ‘attractive’ data centre opportunities for the industrial equipment manufacturers.

Diving deeper into why India will outperform global peers, Harshal Dasani, the business head of INVasset PMS, said that the country is positioned to be the highest-growth data centre market in Asia Pacific over the next decade, backed by outperformance driven by structural rather than cyclical factors.

“Singapore is saturated. Japan and Korea are mature. China remains opaque to foreign capital. India alone combines large demand drivers (the largest digital population in the world, accelerating cloud penetration, mandatory data localisation, and AI workload growth) with supply enablers (cheap land, abundant power capacity additions, and a policy environment that has turned actively supportive),” said Dasani.

In the next three to five years, India is expected to absorb the bulk of incremental APAC data centre investment that might earlier have flowed to Singapore or Hong Kong, said the expert.

However, the risk to such an aggressive push for data centres is the “execution at scale” factor, which is dependent on massive grid and water access.

A report from JJL, a commercial real estate and investment management firm, released earlier this year suggests that nearly 100 gigawatts of new data centres will be added across countries between 2026 and 2030, doubling the global capacity amid the heightened demand.

JLL estimates that the overall industry worldwide will grow at a 14% CAGR. Hence, the wider market estimates India will outperform its global peers in terms of overall growth in the upcoming years.

Will higher energy costs impact data centres' business?

Power costs contribute to nearly 40-50% of the operating costs of a data centre's business, and the companies operating those facilities have multi-year contracts where the hyperscales absorb the variable energy costs in the market.

“Indian data centre operators have moved aggressively into long-term solar and wind power purchase agreements, which both stabilise energy costs and meet the sustainability targets hyperscaler clients now require. Higher energy costs accelerate the renewables transition in this sector rather than dampen demand,” said Dasani.

Is India tax-free for global cloud service providers?

In the Union Budget 2026, the central government announced a tax holiday for all foreign cloud service providers till 2047, due to the rising global demand for AI computing capacity in the market.

This tax holiday is a tax-free window for global companies that are looking to cater to their clients around the world, providing services using data centres located in India and operated by an Indian entity.

The companies will only be eligible for the tax exemption if they are procuring the data centre services from an Indian company operating a facility in the country under the notification of the Ministry.

On top of the tax holiday, if the Indian data centre is a “related entity” of the foreign company, then the company will have a safe harbour tax margin of 15% on the operating costs.

However, the only caveat is that profits that are earned from the domestic economic activities carried out from those data centres will remain taxable just like any other company in the country.

Does India have enough talent to operate data centres?

Talent to operate data centres in India is one of the under-discussed risks in the Indian data centre story, as the companies are now moving towards improving the skills of the employees to equip them for the sector demand.

“The shortage is real for the next two to three years and will likely keep operating costs elevated,” said Dasani.

The expert also said that hyperscalers running their own training programmes in India and training their senior employees from Singapore, Dubai, and the US, as Indian platforms reach institutional scale.

The key focus of the investors will remain on data centre demand amid a modest tailwind for firms positioned in cloud migration and hyperscaler implementation.

Stocks in focus

With global tech giants such as Nvidia, Microsoft, Amazon AWS, Google, and Oracle, among others, planning to move their cloud service operations to India, companies that provide services like infrastructure operation, power equipment manufacturing, cooling solutions, etc., will remain in focus.

The company is the manufacturer of diesel and gas generators, which are essential for power generation in data centre infrastructure. So far in 2026, the stock has gained 29%.

The company manufactures transformers and HVDC (high voltage direct current) systems, which are essential for data centres to connect power to the main facility. Shares of the company have gained 100% year-to-date in 2026.

The company manufactures switchgears and transformers, which are used in data centre operations. Shares of CG Power have delivered 47% returns so far in 2026.

GE Vernova is one of the largest suppliers of grid infrastructure in the country, which caters to global tech giants. So far in 2026, GE Vernova shares have gained 60% on the stock market.

The company specialises in manufacturing switchgears, automated power distribution panels, cooling systems, and busways, among other key products, which are needed in data centre operations. Shares of ABB India were up 40% on a year-to-date basis in 2026.

Stocks like Siemens, Schneider Electric, Polycab India, Exide Industries, and Amara Raja, among several other manufacturers, produce products that are essential for the data centre industry.