India's public cloud spend to hit $17.5B in 2026, up 28%

Key Takeaways

• India's public cloud spending projected to reach $17.5 billion in 2026, a 28.1% year-over-year increase from $13.7 billion in 2025
• AI workloads expected to account for 70% of global data center demand by 2030, up from current levels
• Private equity firms are driving GCC expansion in India, moving beyond large multinationals to mid-sized companies

India's public cloud market is set to grow 28.1% year-over-year to $17.5 billion in 2026, according to a new report from Equirus Securities. The primary drivers: enterprise AI deployments moving from pilot to production, and infrastructure modernization across industries.

The $3.8 billion jump from 2025's projected $13.7 billion reflects a broader shift. Indian enterprises are no longer experimenting with cloud. They're building production-grade AI systems on it.

Where is the growth coming from?

Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) will lead the expansion, Equirus says. The pattern makes sense. Organizations running AI workloads need scalable compute on demand, not fixed data center capacity. PaaS offerings simplify deploying machine learning models without managing underlying infrastructure.

The report estimates India's AI services market is already generating $10-12 billion in annual revenue. More telling: roughly 25% of enterprises have moved AI initiatives from pilot projects into production. That's the inflection point. Pilots consume modest cloud resources. Production AI systems consume orders of magnitude more.

Global data center demand nearly triples by 2030

The global picture reinforces India's trajectory. Colocation data center demand is projected to grow from about 82 GW in 2025 to roughly 220 GW by 2030. That's not a gradual increase. It's a near-tripling of power consumption in five years.

AI workloads will account for around 70% of total data center demand by 2030, per Equirus. The bottlenecks are predictable: power availability, advanced chip supply, and execution speed. Companies that can secure all three will win infrastructure deals. Those that can't will watch competitors scale past them.

For Indian tech services firms like TCS, Infosys, and Wipro, this creates two opportunities. First, consulting revenue from enterprises planning cloud migrations and AI deployments. Second, managed services contracts for organizations that lack internal expertise to run production AI systems.

Private equity is reshaping the GCC landscape

Global Capability Centres in India have traditionally been the domain of Fortune 500 multinationals. That's changing. Private equity firms are now pushing their portfolio companies to establish GCCs, expanding the model to mid-sized enterprises.

The logic is straightforward. PE firms want operational efficiency and cost savings across their holdings. India offers both, plus access to AI and engineering talent at rates that US or European markets can't match. These new GCCs focus on AI, engineering, product development, finance, and analytics.

Equirus points to India's talent pool, cost competitiveness, and digital capabilities as the draw. But the real driver is the math. A senior machine learning engineer in Bangalore costs a fraction of one in San Francisco. For PE-backed companies under pressure to show returns, that arbitrage is hard to ignore.

What enterprises are actually buying

The report identifies four growth areas for India's tech services sector: enterprise modernization, data engineering, AI governance, and intelligent operations. Each represents a different stage of cloud and AI maturity.

• Enterprise modernization: migrating legacy systems to cloud-native architectures
• Data engineering: building the pipelines and infrastructure that feed AI models
• AI governance: ensuring models are compliant, explainable, and auditable
• Intelligent operations: using AI to automate business processes at scale

The sequence matters. You can't deploy AI governance if you haven't built AI systems. You can't build AI systems without data pipelines. And you can't run data pipelines efficiently on legacy infrastructure. Each capability unlocks demand for the next.

Will the growth hold?

28% year-over-year growth assumes enterprises continue converting AI pilots to production. If economic conditions tighten or AI ROI disappoints, some projects will stall. But the underlying trend, enterprises needing more cloud infrastructure, has multiple tailwinds: regulatory pressure for data localization, competitive pressure to adopt AI, and cost pressure to reduce fixed IT spending.

The GCC expansion adds a structural demand layer. Once a company establishes a capability center, it tends to expand headcount over time. Each new hire working on AI or cloud projects consumes additional cloud resources. The growth compounds.

Frequently Asked Questions

How much will India spend on public cloud in 2026?

Equirus Securities projects India's public cloud spending will reach $17.5 billion in 2026, up 28.1% from $13.7 billion in 2025.

What is driving India's cloud market growth?

Enterprise AI deployments moving from pilot to production, platform modernization, and AI-ready infrastructure investments are the primary drivers.

What percentage of data center demand will AI workloads represent by 2030?

AI workloads are projected to account for approximately 70% of total global data center demand by 2030.

Why are private equity firms establishing GCCs in India?

PE firms are leveraging India's talent pool, cost competitiveness, and digital capabilities to build AI, engineering, and analytics capabilities across their portfolio companies.

Which cloud service models are growing fastest in India?

Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) are expected to lead growth as organizations expand cloud-native and AI workloads.

Source: Tech-Economic Times / ET