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India’s Data Center Supply Chain: AI, Quantum & Post-Cloud Readiness
Powered by: Kennies Data Center
Date: June 2025
Dawnload White paper
Leader’s Note
Sunil Kumar Badal
Founder, CEO, Chairman, Kennies Data CenterIn the rapidly evolving global digital infrastructure, India stands at the threshold of a historic transformation. At Kennies Data Center, we have witnessed firsthand how the demands on infrastructure are shifting from traditional scalability to intelligent adaptability. The future will not be defined by the size of our server rooms alone, but by our ability to anticipate and respond to the computational needs of new technologies.
India is at a vital point in its digital infrastructure journey. With the convergence of artificial intelligence, quantum computing, and next-generation cloud architectures, the demands on our data center ecosystem are evolving at an unprecedented pace. At Kennies Data Center, we believe the future isn’t just about capacity – it’s about intelligence, sustainability, and agility.
This whitepaper reflects our commitment to decoding this transformation. From powering real-time AI workloads in remote geographies to enabling a decentralized post-cloud architecture, India’s supply chain for digital infrastructure must now be built with foresight.
We are proud to be at the forefront of this shift, empowering enterprises, governments, and communities with infrastructure that is future-ready and deeply rooted in Indian innovation.
As you navigate the pages ahead, you’ll witness how a vibrant ecosystem—comprising policy shifts, edge-ready designs, and hyperscale investments – is setting the tone for a resilient digital Bharat.
Leader’s Note
The data center industry in India is no longer just about hosting – it’s about enabling transformation. AI, quantum computing, and post-cloud frameworks demand low-latency, ultra-secure, and high-performance infrastructure.
As Managing Director, I’ve seen how aligning people, policy, and purpose can turn these demands into nationwide opportunities.
This whitepaper explores the critical evolution of India’s data center supply chain. It’s a call to action for developers, technology leaders, and policymakers to co-create a smarter digital future. The journey from traditional colocation to intelligent, autonomous infrastructure must be built on strong partnerships and trusted frameworks.
We are not just building data centers – we are laying the digital foundation for everything from smart governance to climate tech. Let this whitepaper serve as both a guide and a vision document, inviting stakeholders to participate in building a truly Atmanirbhar digital ecosystem.
Mr. Anil Pandey
M D,Kennies Data CenterLeader’s Note
Mr. Ashutosh
President, Kennies Data CenterIndia’s data center evolution is no longer a linear progression—it’s an exponential leap into intelligent infrastructure.
As AI algorithms mature, quantum breakthroughs emerge, and post-cloud models challenge legacy systems, the role of strong, adaptive supply chains becomes central to national competitiveness.
In my capacity as President, I have witnessed firsthand how our digital infrastructure is transitioning from reactive to predictive. The convergence of technologies demands data centers that are smarter, closer to the edge, and powered by renewable energy. We must now reimagine the data center not just as a facility, but as a living node in a responsive, AI-augmented network.
This whitepaper covers our shared vision: a digitally sovereign India, equipped with resilient supply chains that can fuel not just business growth, but societal transformation. I invite every reader – policymaker, technologist, investor—to engage deeply and act boldly.
Executive Summary
India stands at the threshold of a major transformation in its digital infrastructure. With an expanding digital economy, increasing cloud adoption, and the convergence of interesting technologies like Artificial Intelligence (AI) and Quantum Computing, India’s data center ecosystem is experiencing a historic inflection point.
The rapid evolution of workloads – driven by AI model training, real-time analytics, edge computing, and quantum workloads – demands a re-evaluation of existing supply chains underpinning data center development and operations.
This whitepaper explores the strategic readiness of India’s data center supply chain, focusing on its capacity to support the next era of computation beyond the traditional cloud – an era defined by AI acceleration, quantum integration, and geopolitical shifts in data sovereignty.
We examine policy initiatives, infrastructure bottlenecks, talent availability, hyperscale investments, and indigenous capability development.
The objective is to inform stakeholders – from policymakers and infrastructure providers to hyperscalers and semiconductor manufacturers – about the evolving contours of India’s readiness and the crucial pathways toward securing technological and supply chain resilience.
The Age of Disruption Meets the Digital Core
India’s digital growth story is no longer a projection – it is a lived economic transformation. By 2025, India is projected to host over 1.2 billion digital users, support a burgeoning $1 trillion digital economy, and emerge as one of the world’s top data-generating geographies.
At the heart of this transformation lies the humble data center – no longer just a utility, but the engine room of national competitiveness and strategic autonomy.
However, this growth coincides with three simultaneous disruptions:
India’s Digital Growth by 2025
- Digital Users: Over 1.2 Billion
- Digital Economy: Estimated at $1 Trillion
- Data Generation: Among the top in the world
- Data Centers: From utility to strategic engine rooms
The Three Disruptions Transforming Infrastructure
- AI Compute Explosion
- Rise of Large Language Models (LLMs) and Generative AI
- Demand for high compute density and real-time throughput
- Quantum Edge
- Nascent but impactful quantum technologies
- Disrupting cryptography, optimization, and infrastructure design
- Post-Cloud Architectures
- Growth of Edge-native, Hybrid, Sovereign, and Zero-Trust cloud models
- Reconfiguring data center topology and supply chain strategies
India must now reconcile its ambitions with its infrastructure: Can the supply chain sustain the performance, scale, and strategic autonomy these technologies demand?
Current Landscape of India’s Data Center Infrastructure
As of early 2025, India houses approximately 1.2 GW of operational data center capacity, with an additional 1.7 GW under development. Key urban hubs – Mumbai, Chennai, Hyderabad, Pune, and Delhi NCR – host hyperscale and colocation facilities that increasingly serve both domestic demand and global workloads.
Key Characteristics:
- Urban clustering: Tier-1 city dependence results in land, power, and cooling constraints.
- Renewable integration: Sustainability mandates are driving interest in solar, hydro, and hybrid energy sourcing.
- Policy tailwinds: Government initiatives such as the Data Centre Policy 2020, PLI schemes, and the Digital Personal Data Protection Act 2023 are enabling structured growth.
Edge push: Telecom and CDN players are investing in micro data centers at the edge – fueling decentralization and latency-sensitive architectures.
Is There Any Challenges:
- Supply chain dependency on imports, especially for high-density racks, GPUs, and precision cooling systems.
- Long lead times for specialized infrastructure components, affecting AI-ready deployments.
- Talent shortages in areas such as AI model engineering, quantum physics, and chip design.
While India’s macroeconomic fundamentals support a strong growth narrative, a qualitative shift in supply chain capability is necessary for resilience in the age of AI and quantum.
AI Workloads and Compute Supply Chains: A Structural Mismatch
AI – particularly generative AI – has upended traditional assumptions about compute infrastructure. Training a single large AI model may require tens of thousands of GPUs, terabytes of memory, and megawatts of sustained power – all optimized for thermal efficiency and distributed computing.
Supply Chain Pain Points:
- Limited domestic GPU manufacturing. India lacks foundries or advanced packaging facilities for AI-grade chips, depending heavily on U.S., Taiwan, and South Korea.
- Power and cooling scalability. AI racks often exceed 40 kW per rack density—well above conventional thresholds in Indian data centers.
- Logistics and customs lag. Delays in import clearances and lack of bonded warehousing for critical AI components add weeks to deployment timelines.
Emerging Trends:
- GPU-as-a-Service models are gaining traction, with cloud-native startups offering AI compute rentals.
- AI-ready campuses are under construction by both hyperscalers and domestic providers, featuring direct liquid cooling and chip-agnostic designs.
- Collaborative procurement alliances may help smaller players gain access to scarce AI hardware.
India must treat AI infrastructure as a national priority – not just from a productivity lens, but from a strategic autonomy and digital sovereignty perspective.
Quantum Computing: The Disruptor in the Supply Chain
While India’s quantum computing ecosystem is still in its infancy, it is already beginning to shape supply chain thinking. The Government of India launched the National Quantum Mission (NQM) in 2023, aiming to build a framework for quantum communication, sensing, and computing over the next decade.
Implications for Data Centers:
- Cryogenic requirements: Quantum systems require sub-zero environments – posing unique cooling challenges for facilities.
- Quantum-safe cryptography: Data centers must begin upgrading to post-quantum encryption standards to ensure long-term data protection.
- Hybrid processing needs: Co-location of classical and quantum processors may drive new design topologies in secure facilities.
Supply Chain Preparedness:
- India has minimal capacity to produce superconducting chips, photonic components, or dilution refrigerators.
- Quantum-related infrastructure currently relies on global academic and industrial supply chains – vulnerable to geopolitical shifts.
- Indigenous development programs are underway but need stronger integration with private sector R&D.
In a post-cloud, AI-dominated landscape, quantum will not replace classical computing, but it will demand new infrastructure paradigms – and India must act now to build future-ready foundations.
Post-Cloud Paradigms and Edge-Native Topologies: Redefining Infrastructure Blueprints
India’s geographic and demographic complexity makes edge infrastructure not just beneficial but essential. With over 70% of the population living outside Tier-1 cities, centralized cloud models struggle to meet low-latency requirements for applications such as autonomous vehicles, telemedicine, smart agriculture, and immersive content delivery.
Key Considerations For Edge-Native Topologies
- Latency Sensitivity: Services like 4K video streaming, AR/VR, and industrial loT require response times under 10 milliseconds – unachievable with distant data center hubs.
- Data Sovereignty: The Digital Personal Data Protection Act (DPDPA) 2023 mandates localization of sensitive personal data, incentivizing the creation of sovereign, regionally compliant edge nodes.
- Edge-Cloud Interoperability: Seamless workload mobility between centralized and decentralized environments requires common orchestration layers and scalable network fabrics.
Current Gaps in India’s Edge Readiness
- Fragmented rollout: Most edge deployments are ad hoc, led by telecoms or CDNs without a national blueprint.
- Limited power availability: Edge sites often face grid instability and lack the capacity to support high-density hardware.
- Rudimentary cooling and physical security: Makeshift or co-located facilities lack the environmental controls and physical protections needed for mission-critical workloads.
Policy and Industry Imperatives:
- Establish a National Edge Infrastructure Framework (NEIF), aligning with 5G and BharatNet rollouts.
- Encourage modular edge facility designs, capable of rapid deployment in remote or underserved regions.
- Incentivize local manufacturing of micro-data center hardware and ruggedized components.
Supply Chain Localization: Building Strategic Depth
India’s data center growth has been heavily reliant on imported technologies and components, exposing the sector to global supply shocks, tariffs, and geopolitical risks. To become AI-native and quantum-ready, India must pivot from scaling capacity to developing core competencies.
The Need for a Localized Ecosystem
To date, India imports:
- Over 90% of its AI-grade GPUs and CPUs.
- Precision cooling systems and heat exchangers.
- High-density server racks and PDUs.
- Even software-defined data center (SDDC) platforms and firmware stacks.
This creates both a risk and an opportunity. Localizing even a portion of this stack can drive down costs, improve lead times, and stimulate domestic innovation.
Supply Chain Bottlenecks:
Component | Dependency | Challenge |
GPUs / AI accelerators | US, Taiwan, South Korea | Export controls, high demand |
Optical fiber, switches | China, Japan | Cost volatility, geopolitical tension |
Cooling systems | Europe, China | Customization lead times |
Power infrastructure | Mixed | Delay in grid upgrades for Tier-2 sites |
Initiatives to Watch:
- PLI Scheme for Semiconductors: Promises to incentivize chip packaging and fabrication within India.
- Make-in-India for IT Hardware: Targeting domestic server and storage manufacturing.
- Green Data Center Certification Programs: Encouraging localization of sustainable technologies.
What Needs to Happen:
- Establish Data Center Industrial Clusters with SEZ-like benefits for logistics, import handling, and R&D.
- Develop a national bonded warehousing network with fast-track customs clearance for critical components.
- Co-invest in AI chip design incubators, aligned with global open-source chip design initiatives like RISC-V.
Human Capital: Bridging the Talent-Technology Chasm
India’s technical talent pool is one of its greatest advantages. Yet the specialized nature of AI, quantum, and post-cloud infrastructure demands a new breed of engineers, blending hardware, software, and domain-specific expertise.
Talent Gaps:
- AI Infrastructure Engineers: Skilled in distributed systems, model optimization, and data pipeline management.
- Quantum Hardware Specialists: Cryogenic engineering, superconducting chip calibration, and quantum optics.
- DevSecOps for Hybrid Architectures: Skilled in managing infrastructure-as-code in secure, decentralized deployments.
- Sustainability Engineers: Professionals who can optimize energy mix, thermal design, and carbon footprint in real-time data center operations.
Current Challenges:
- Brain drain to global hyperscalers and foreign universities.
- Lack of AI and quantum hardware training in mainstream engineering curricula.
- Industry-academia disconnect – limited internships or live projects in high-performance computing environments.
Recommendations:
- Launch a National Data Center Skills Mission, modeled on the Digital Skills Mission, focusing on AI, quantum, and edge computing.
- Incentivize joint industry-academia labs, where data center providers can offer real-world infrastructure access to universities and startups.
- Create quantum and AI hardware fellowships to seed indigenous R&D and technology transfer pathways.
Sustainability, Resilience, and Strategic Autonomy
No discussion of future-ready infrastructure is complete without addressing energy sustainability and geopolitical resilience. As AI and quantum workloads intensify power demands, and edge deployments increase geographic dispersion, India’s data centers must align with green energy goals and sovereignty imperatives.
Energy Considerations:
- AI workloads can increase PUE (Power Usage Effectiveness), pushing traditional data center efficiency metrics to their limits.
- Integration with renewable sources – solar, hydro, wind—is crucial but requires grid modernization and energy storage capacity.
- Adoption of direct-to-chip cooling and liquid immersion is necessary to keep thermal footprints manageable.
Geopolitical Factors:
- Chip embargoes, export controls, and cybersecurity concerns have highlighted the fragility of cross-border tech supply chains.
- India’s long-term interests lie in building secure, indigenous alternatives to critical components and platforms.
- Partnerships with neutral nations for joint ventures in AI/quantum R&D could provide resilience against future supply shocks.
Roadmap for Sustainability & Autonomy:
- Mandate green building certifications for all new hyperscale and edge facilities.
- Build strategic reserves of AI hardware in bonded zones, ensuring continuity during global disruptions.
- Develop sovereign AI models and compute platforms, hosted within India for critical public sector and defense applications.
Shares In AI-Ready Data Centers
These segments collectively drive the evolution of India’s AI-ready data center market. Their combined demands necessitate high computational capacity, robust data governance, and scalable cloud infrastructure.
- E-Commerce (30%): The e-commerce sector leads AI-ready data center demand, driven by real-time personalization, recommendation engines, and large-scale logistics optimization.
- Healthcare (25%): Healthcare contributes significantly through AI-based diagnostics, predictive analytics, and personalized treatment models.
- Fintech (25%): AI applications in fraud detection, algorithmic trading, and customer behavior analysis are transforming the fintech industry.
- Logistics (20%): With AI adoption in supply chain automation, route optimization, and real-time tracking, logistics is a fast-growing segment.
Case Study: AI-Optimized Data Campuses
Unveiling India’s First Liquid-Cooled, AI-Native Data Park
India’s digital transformation journey has taken a leap forward with the establishment of the country’s first AI-native, liquid-cooled data campus. Located strategically in a Tier-2 city, this facility showcases scalable architecture, energy-efficient design, and advanced GPU orchestration tailored for AI workloads. This case study decodes its core components and presents replicability insights for broader national deployment.
Key Highlights
- Location: Indore, Madhya Pradesh
- Scale: 40 MW campus with potential to expand to 120 MW
- Cooling Innovation: Direct-to-chip liquid cooling; ~35% higher thermal efficiency than air-cooled counterparts
- Power Efficiency: Achieved a PUE (Power Usage Effectiveness) of 1.12
- GPU Stack: 800+ NVIDIA H100s managed via containerized Kubernetes clusters
- Deployment Time: 8 months from blueprint to live operations
Design Architecture Overview
- Modular construction for phased scalability
- AI workload-specific GPU pods interconnected via 400G fabric
- Smart load balancers and predictive AI-based cooling management
- Solar-integrated roof panels powering 12% of energy needs
Operational Learnings
- Power Density Optimization: Achieved 55kW per rack using immersion-based auxiliary cooling
- Uptime: 99.999% SLA maintained during regional power disruptions
- Water Usage Reduction: Closed-loop cooling system cuts water consumption by 70%
Implications for Tier-2 Expansion
- Workforce Readiness: Collaboration with local universities helped train 300+ technicians pre-launch
- Policy Incentives: Capitalized on the MP Data Centre Policy (2022) offering 25% CAPEX subsidy
- Real Estate Advantage: Land acquisition costs were 4X lower compared to Tier-1 cities
- Latency Gains: Delivered sub-15ms latency to nearby industrial zones and research hubs
- Workforce Readiness: Collaboration with local universities helped train 300+ technicians pre-launch
Digital Sovereignty and Data Localization
As AI and quantum computing scale, data becomes a sovereign asset. The introduction of the Digital Personal Data Protection Act (DPDPA) 2023 signifies a regulatory shift toward strong localization and trust frameworks. The implications for data center operators are profound, necessitating investment in compliant infrastructure and governance protocols.
Infrastructure Requirements:
- Zoned architecture to segregate sensitive workloads.
- Local key management and encrypted storage solutions.
- Auditable compliance tools with built-in consent layers and breach-response capabilities.
Strategic Recommendations:
- Define Sovereign Cloud Zones within hyperscale campuses.
- Enable secure, encrypted data mobility across state borders.
- Foster indigenous development of compliance tech (RegTech) tools to support localization at scale.
Market Growth: India’s Data Center Supply Chain
India’s data center sector is undergoing a transformative expansion, propelled by surging digital demand, AI adoption, and upcoming quantum readiness. From hyperscale campuses to localized edge nodes, the ecosystem is evolving beyond traditional compute to support next-generation workloads.
Market Snapshot (2024–2030)
- $8 billion: India’s data center market valuation in 2024
- $18.2 billion: Projected size by 2030 (CAGR of 14.6%)
- 35%: Share of AI-accelerated workloads by 2027 (from 12% in 2023)
- 10 GW+: Total planned IT load capacity by 2030
- Top 3: India projected to be among top 3 APAC data center hubs by 2027
Key Growth Drivers In AI, Quantum & Post Cloud Readiness
- AI Infrastructure Demand: Explosion of GenAI and LLM training is pushing for GPU/TPU-powered data parks.
- Cloud Saturation: Enterprises are shifting from public cloud to hybrid and post-cloud models to optimize cost and latency.
- Policy Support: State incentives (e.g., UP, MP, Maharashtra) and the Digital India Act are fueling rapid hyperscale and edge deployments.
- Quantum Push: Government’s ₹8,000 crore National Quantum Mission to lay the groundwork for quantum data processing infrastructure.
- Local Manufacturing: “Make in India” and PLI schemes are anchoring server, chip, and cooling supply chains domestically.
Geographic Expansion Trends
Region | Key Trends |
Mumbai | Financial AI hubs, hyperscale clusters |
Hyderabad | GPU farms, R&D, and sovereign cloud zones |
Chennai | Subsea cable landing, edge-ready parks |
Noida | Post-cloud architectures and AI labs |
Indore/Nagpur | Tier-2 growth, immersion cooling pilots |
Visual Insight: Segment-Wise Growth Projections
Segment | CAGR (2024–30) | 2030 Share |
AI Data Infrastructure | 26.5% | 34% |
Quantum Compute Facilities | 19.2% | 12% |
Edge & Micro Data Centers | 22.1% | 21% |
Legacy & Traditional DCs | 4.8% | 8% |
Cloud-native & Hybrid | 13.6% | 25% |
Outlook: The 2030 Vision
India will be home to over 1,000 edge data centers and 20 hyperscale campuses. Integration of quantum-class systems for defense, finance, and scientific research. AI-native campuses driving up to 50% of compute capacity allocation
Cybersecurity and Zero Trust Architectures for Next-Gen Data Centers
As India transitions to decentralized, AI-rich, and edge-integrated systems, conventional perimeter-based cybersecurity models fail to provide sufficient protection. A Zero Trust Architecture (ZTA)—where verification is continuous, context-aware, and automated—is now mission-critical.
New Threat Landscape:
- AI model theft and poisoning.
- Quantum-powered decryption risks.
- Edge attack surfaces with unsecured physical and network interfaces.
Core ZTA Components:
- Identity-first security (IAM for workloads and users).
- Micro-segmentation and workload-based access controls.
- Continuous risk assessment and behavior-based threat detection.
Call to Action:
- Define a national ZTA reference model specific to data centers and edge environments.
- Launch a Cyber-Physical Infrastructure Defense Program for critical digital campuses.
- Encourage domestic development of post-quantum cryptographic algorithms and secure firmware stacks.
Digital Sovereignty and Data Localization
Transformational infrastructure requires bold, sustained policy frameworks and execution institutions. While India has made commendable progress (e.g., PLI schemes, NQM, DPDPA), a consolidated and forward-looking governance model is essential to support the convergence of AI, quantum, and cloud technologies.
Institutional Gaps:
- Fragmented authority: Data center, cloud, semiconductor, and energy policies reside in different ministries with minimal coordination.
- Absence of fast-track clearances for edge deployments or AI data parks.
- Weak industry-academia-policy collaboration loops.
Proposed Structures:
- Establish a National Digital Infrastructure Mission (NDIM) to unify policy execution across MeitY, MNRE, DoT, DPIIT, and NITI Aayog.
- Create a Data Center and Compute Infrastructure Authority (DCCIA) for regulatory oversight, R&D funding, and standards enforcement.
- Launch India’s Digital Infrastructure Report annually—tracking capacity, utilization, sustainability, and localization metrics.
Immediate Policy Imperatives:
- Accelerate environmental and grid approvals via single-window clearances.
- Link incentives with energy-efficiency metrics and talent localization.
- Recognize data centers as infrastructure under GST and banking norms for financing parity.
Key Takeaways From Our Whitepaper
- AI is Reshaping Infrastructure Economics
- Quantum is Inevitable, Not Optional
- Edge is the New Core
- Supply Chain Localization is Strategic Insurance
- Human Capital is the True Differentiator
- AI is Reshaping Infrastructure Economics
- Sustainability and Sovereignty Must Coexist
Summarised Ideas
India stands at a generational inflection point—where the convergence of AI, quantum computing, and post-cloud paradigms offers both unparalleled opportunities and unprecedented infrastructure challenges. The success of India’s digital economy will depend not just on growth in compute capacity, but on the strategic intelligence of its data center supply chain.
This whitepaper has highlighted how India must shift from reactive scalability to predictive, adaptive, and sovereign digital infrastructure. From GPU shortages to cryogenic quantum facilities, and from policy fragmentation to edge-readiness gaps, it is clear that a whole-of-ecosystem transformation is essential.
References
- Ministry of Electronics and Information Technology (MeitY) – Data Centre Policy 2020
- Digital Personal Data Protection Act (DPDPA), 2023 – Government of India
- National Quantum Mission (NQM) – Department of Science & Technology, Government of India
- Production Linked Incentive (PLI) Scheme for Semiconductors and IT Hardware – Ministry of Electronics and IT
- NITI Aayog Reports on Emerging Technologies & AI Readiness – 2023–2024
- International Energy Agency (IEA) – Data Centers and Energy Use Reports
- World Economic Forum – Quantum Computing Governance Principles, 2023
- McKinsey & Company – The Future of Data Centers in a Post-Cloud Era, 2024
- Gartner – Market Trends: Edge Computing, AI Infrastructure & Hyperscale Deployment, 2023
- IDC India – Data Center Market Projections and AI Workload Growth, 2023–2030
- IEEE Xplore – Research on Direct-to-Chip Cooling and Quantum Hardware Engineering
- Indian Institute of Science (IISc), Bangalore – Quantum Research and Cryogenic Systems Labs
- India Semiconductor Mission (ISM) – Program Literature and Strategic Roadmaps, 2024
- UP, MP, Maharashtra Data Center Policies – State Government Publications, 2022–2024
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