India’s Data Centre Boom to Add 0.13% to GDP by 2030: Moody’s

India’s rapidly expanding data-centre industry is set to boost economic activity, but its direct contribution to the country’s overall GDP will remain relatively modest, reaching around 0.13 per cent by 2030, according to a report by Moody’s Ratings.

The report estimated that investment in data-centre infrastructure would contribute about 0.10 percentage point to nominal GDP during the construction phase in 2025. Additional investment required for power generation is expected to contribute another 0.03 percentage point.

Once the facilities become fully operational, the overall direct contribution of the data-centre sector is projected to stabilise at around 0.13 per cent of GDP by 2030.

Moody’s noted that the scale of investment and employment generated by the industry is significant in absolute terms, but remains relatively small when compared with the size of India’s economy.

“India’s planned investment and construction employment are substantial in absolute terms but small relative to the size of the economy,” the ratings agency said.

The agency, however, pointed out that the importance of the data-centre boom goes beyond its immediate contribution to GDP. The longer-term economic benefits could be considerably larger if the investments help develop domestic suppliers, accelerate cloud adoption, expand digital-services exports and create a broader technology ecosystem around data-centre infrastructure.

Limited impact on employment

Despite the huge investments involved, data centres are unlikely to become a major source of employment because the industry is highly capital-intensive.

According to Moody’s estimates, construction-related employment linked to data centres will account for only around 0.01 per cent of industry employment in 2025. This could rise to approximately 0.02 per cent once the facilities are fully operational.

Most of the long-term jobs created by the sector are expected to be concentrated in specialised areas, including engineering, technology, operations and infrastructure management.

Power demand remains manageable

The rapid expansion of data centres is also raising questions about their electricity requirements. Moody’s, however, does not expect data centres to become a major national constraint on power availability.

The report projects that data centres will account for less than 5 per cent of India’s total electricity demand by 2030. Given the size of India’s power market, the country is considered better positioned than smaller regional economies to absorb the additional demand.

However, the report stressed that adequate transmission and distribution infrastructure will be critical, particularly around major data-centre clusters. Delays in connecting new facilities to the power grid could become a more immediate challenge than overall electricity availability.

Investment crosses $250 billion

India has emerged as an increasingly important destination for data-centre investment as demand for cloud computing, artificial intelligence, digital services and data storage continues to rise.

Domestic conglomerates, global technology companies and independent data-centre operators have collectively announced investments of more than $250 billion in data-centre capacity, highlighting the scale of the industry’s expansion.

While the direct GDP impact may appear relatively small, Moody’s assessment suggests that the bigger economic opportunity lies in what develops around the data-centre industry — from power and construction to cloud services, equipment manufacturing, digital exports and specialised technology jobs.