Despite billions of dollars in announced investments in the data center sector, India's gross domestic product growth may remain limited by 2030, as high import dependence constrains the creation of domestic added value and jobs, reports Moody's Ratings in a report published on Tuesday.
Moody's forecasts indicate that capital expenditures on data centers could contribute about 0.10 percent to India's nominal GDP in 2025 during the construction phase, while investments in additional power generation could add another 0.03 percent. Even after the facilities are fully operational, their contribution is estimated by Moody's to be only 0.13 percent of GDP.
Moody's notes that planned investments and construction employment in India are significant in absolute terms, but small relative to the size of the economy. Although these investments have strategic and local importance, they are 'not yet large enough to substantially change the national growth profile.' The long-term economic effect will depend on whether the investment triggers supplier localization, broader adoption of cloud technologies, growth in digital service exports, and the development of the entire ecosystem.
Limited job growth
Job growth is also expected to be modest, as data centers require significant capital investment. Employment related to construction is estimated to account for about 0.01 percent of industry employment in 2025, increasing to 0.02 percent after the facilities become fully operational. Long-term employment is likely to remain limited and concentrated in highly specialized roles.
Power availability is not a constraint
According to Moody's, power availability is unlikely to become a nationwide obstacle. It is expected that by 2030, data centers will consume less than 5 percent of India's total electricity demand, putting the country in a more favorable position compared to smaller regional markets for absorbing additional load. Nevertheless, timely provision of transmission and distribution connectivity to major data center clusters, including Mumbai, will remain critically important.
The key limiting factor for India is the high intensity of imports in this sector. A significant portion of data center expenditures goes towards importing servers, semiconductors, cooling systems, and specialized IT equipment, which limits domestic added value. Moody's noted that imports related to data centers accelerated since 2023, particularly in India, Thailand, and Vietnam.
India attracts over $250 billion in announced investments. Domestic conglomerates, global technology companies, and small independent firms that have announced investments exceeding $250 billion are betting on the growth sector. Major projects include the Google and Adani project worth $15 billion with a capacity of 1 gigawatt (GW) in Visakhapatnam, as well as the Tata Consultancy Services HyperVault project of similar size valued at $7 billion, announced in October 2025.
Amid increased investor interest in data centers, Finance Minister Nirmala Sitharaman previously announced this year a complete tax holiday until 2047 for foreign cloud service providers who use Indian data centers to host data or run workloads.