It looks like U.S. tech companies are scared to do business in India. U.S. technology companies are delaying their decisions to lease large data centers in India, jittery from the recent souring of trade ties between New Delhi and Washington, D.C.
The orders from Big Tech companies for hyperscalers, or data centers that consume vast amounts of computing power, are “still in the pipeline, but they are holding the pen and saying let me not sign it just yet,” said Alok Bajpai, managing director of India for NTT Global Data Centers.
“The new U.S. tariffs on Indian exports have unsettled global supply chains and made equipment and input costs harder to pin down,” said Jitendra Soni, a partner in the technology and data privacy practice at law firm Argus Partners.
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India’s data center capacity is expected to nearly triple in the next five years from 1.2 gigawatts to more than 3.5 gigawatts by 2030, according to multiple industry estimates, despite the tensions with Washington.
“India’s underlying appeal has not dimmed and remains compelling,” Soni said. “But deals are now closing more slowly, and with far more lawyering around who bears the next global shock.”
Data centers are specialized facilities that house computer systems and related infrastructure, including servers, storage, networking equipment, power supplies, and cooling systems. They are essential for storing, processing, and managing large volumes of data and are the backbone of digital services such as cloud computing, websites, social media, online banking, and enterprise applications. Depending on their purpose, data centers can be privately owned (enterprise), rented (colocation), cloud-based, or located near end users (edge) to reduce latency. In short, they enable the smooth functioning of nearly all modern digital operations.
The current reluctance by U.S. tech giants to finalize data center deals in India highlights the delicate balance between geopolitical tensions and long-term market potential. While trade friction—like the imposition of new U.S. tariffs on Indian exports, has introduced short-term uncertainty, it does not appear to have fundamentally shaken confidence in India’s digital infrastructure ambitions.
Global tech firms are taking a more cautious approach, delaying decisions and demanding stronger legal and commercial safeguards. This indicates a shift toward more risk-aware investment strategies rather than a loss of interest in the Indian market.
India, on the other hand, continues to offer strong fundamentals: a large and growing internet user base, favorable government policies supporting digital infrastructure, and a strategic position in the global IT ecosystem. The country’s projected data center capacity growth, expected to nearly triple by 2030, signals that the overall trajectory remains positive, even if timelines stretch and negotiations become more complex.
For India, this moment serves as both a challenge and an opportunity. On one hand, it must address investor concerns with clear, stable policy frameworks and improved trade diplomacy.
On the other, it can use this period to strengthen domestic capacity, incentivize local partnerships, and position itself as a more self-reliant digital hub. In the long run, how India manages this phase of cautious optimism will determine whether it can fully capitalize on its potential to become a global leader in the data infrastructure space.