India is undergoing a significant economic transformation, with digital infrastructure emerging as a crucial driver of growth. Over the past decade, the nation has steadily built a robust digital backbone, characterized by deep telecom penetration, widespread smartphone usage, real-time payments, and digital identities, fundamentally altering business operations and consumer engagement. This foundation is now paving the way for large-scale expansion of physical infrastructure, particularly data centers and the energy systems that power them.
Recognizing the immense potential, the Indian government has been actively promoting the development of digital infrastructure through various policies and initiatives. Union Minister for Electronics and Information Technology Ashwini Vaishnaw noted that investments in India's data center ecosystem are projected to exceed $200 billion. Already, there are commitments of around $70 billion towards data center development, with total announced investments nearing $90 billion. This surge in investment is expected to significantly strengthen India's artificial intelligence ecosystem, providing startups, technology firms, and service providers access to large-scale computing infrastructure within the country.
To catalyze capital investment in digital infrastructure, the Union Budget 2026 proposes a tax holiday until 2047 for foreign companies providing global cloud services, contingent upon their utilization of Indian data centers and local resellers. This initiative, coupled with safe harbor provisions for domestic data center providers, signals a strong "Data-in-India" mandate. The budget also emphasized bolstering infrastructure and logistics sectors with a focus on energy efficiency. Sunil Bharti Mittal, founder & chairman of Bharti Enterprises, believes that this impetus to the data center ecosystem will reinforce confidence in India's burgeoning digital economy.
India's approach to digital infrastructure extends beyond physical assets. The government has signed memorandums of understanding (MoUs) with 23 countries to promote India Stack and Digital Public Infrastructure (DPI). These collaborations focus on areas like digital identity, payments, data exchange, and service delivery, aligning with India's DPI diplomacy under the India Stack framework. The Unified Payments Interface (UPI) is now operational in more than eight countries, facilitating cross-border remittances, promoting financial inclusion, and strengthening India's position in the global fintech ecosystem.
The expansion of digital infrastructure is not without its challenges. A significant digital gender divide persists, necessitating targeted interventions to ensure women's inclusion. The Women in the Digital Economy Fund (WiDEF), a collaborative effort between USAID, the Bill and Melinda Gates Foundation, and Reliance Foundation, has launched a funding initiative to address barriers to internet access for women across India.
Despite these challenges, the trajectory is clear: digital infrastructure is set to play a defining role in India's economic future. With strategic investments, supportive policies, and a focus on inclusive growth, India is poised to unlock new opportunities and optimize existing ones through its digital prowess. The digital economy is estimated to constitute a fifth of India's GDP by 2026. The India AI Impact Summit 2026 will focus on priorities such as infrastructure and data sharing, regulatory sandboxes, AI risk monitoring and more.