Why India Inc Should Build Its AI Application on Top of Local Datacentres

As India accelerates its digital transformation, artificial intelligence (AI) is set to contribute $450-500 billion to India's GDP by 2027, representing 10% of the country’s $5 trillion target. To realize this ambition, local datacenters are not just preferable—they are essential.

AI is revolutionizing the datacenter industry, driving demand for strong processing capabilities and robust data storage, highlighting the crucial role of digital infrastructure in sustaining India's digital economy.

AI as a Geopolitical Tool: The New Global Reality

AI is reshaping global power dynamics, emerging as a key instrument in diplomacy. Recent U.S. restrictions on AI chip exports to countries like China demonstrate how technological capabilities are now being strategically wielded to influence international relations.

These export controls will — Restrict potential military and surveillance applications, Slow down technological advancement in competing nations, and Create economic pressure due to technological dependency, which leads to maintain economic superiority. This approach transforms AI and semiconductor technology from pure technical assets into geopolitical instruments, where technological superiority translates directly into global influence.

India lost the battle in search, maps, social media, and cloud platforms, becoming heavily reliant on American companies. This dependence is a strategic vulnerability—any diplomatic rift could severely impact our economy and digital operations.

Data Sovereignty: The Non-Negotiable Imperative

Though For India, AI is now integral to government operations, banking, healthcare, and defence, foreign infrastructure dependency poses a national security risk. Sovereign AI technology is crucial to ensuring India’s independence in critical sectors.

Keeping data within Indian borders ensures regulatory compliance and protects national assets. The Personal Data Protection Bill and Digital India Act reinforce the government’s commitment to data localization. Using local datacenters is a necessity in the AI era.

Beyond Software: India's Need for Hardware Independence

Developing indigenous AI, including GPUs and specialized computing hardware is required. India must invest in domestic AI chip manufacturing to mitigate global supply chain risks and prevent technological embargoes.

The global AI chip shortage and increasing export restrictions highlight the urgency of building a domestic hardware ecosystem. Achieving self-reliance in AI infrastructure will ensure long-term technological sovereignty and economic growth.

Latency: The Silent Performance Killer

AI applications require real-time processing. Local datacenters reduce data travel distance, improving performance and efficiency.

At CtrlS, our experience shows that local processing significantly enhances AI-driven operations. Lower latency translates to better user experiences and more effective AI applications.

Building Digital Self-Reliance

The pandemic underscored the importance of self-reliance. Just as ‘Make in India’ strengthened manufacturing, we must now embrace ‘Digital Atmanirbhar Bharat’ by building AI infrastructure locally. A strong domestic ecosystem will protect India from global disruptions.

Expanding Government Investment: A National Priority

The government has taken commendable steps by introducing subsidies for AI research, academic institutions, and startups. However, the current allocation falls short of what is needed to compete globally. Countries like the U.S. and China are investing hundreds of billions in AI—India must match this ambition with significant funding.

Economic Multiplier Effects

Investing in local datacenters boost economic growth by creating high-skilled jobs, driving innovation, and positioning India as a global AI hub. AI investments shouldn't be viewed as expenses but as strategic assets that will yield returns many times over. By my conservative estimates, every rupee invested in indigenous AI capabilities today will generate at least 100 rupees in economic value over the coming decades. When India Inc builds on local infrastructure, it fosters a cycle of investment and development, accelerating national progress.

Energy Efficiency and Sustainability

India’s climate demands datacenter solutions optimized for local conditions. CtrlS datacenters are designed for maximum efficiency, achieving industry-leading PUE metrics. Tailored infrastructure ensures AI operations align with sustainability goals.

India’s vast solar energy potential can power AI processing, reducing its carbon footprint while enhancing its reputation as a hub for sustainable innovation. Strengthening AI and optimizing datacenter efficiency will be key to shaping an energy-resilient future.

The Path Forward

As India aims for a $5 trillion economy, AI will be a major enabler. To harness its full potential, we must build AI infrastructure locally. Datacenters attuned to India’s regulatory landscape, business needs, and technical requirements will drive the nation’s AI leadership.

The global AI race is not just about algorithms—it is about sovereign digital infrastructure. Choosing local datacenters for AI applications is a strategic investment in India’s digital future.

India must lead rather than follow. By building AI infrastructure on Indian soil, we secure technological sovereignty, economic prosperity, and a strong global position. Our AI future must be built on our terms, ensuring resilience, security, and innovation for generations to come.