For artists and makers relying on generative models, the implications are clear: the hardware required to run these tools is shifting south. A massive influx of capital is flowing into India to build the physical infrastructure that will power the next wave of creative AI, ensuring that the compute needed for your projects is available closer to home.
Capital moves to India’s digital soil
The Canada Pension Plan Investment Board, operating as CPP Investments, has entered the fray with a significant commitment of up to ₹70 billion (approximately $741 million) to CtrlS, a leading Indian data centre operator. This move underscores a broader global trend where investors are betting heavily on India’s emerging role in the cloud and AI buildout.
The deal, confirmed on Wednesday, breaks down into two distinct financial injections. First, CPP Investments will pour ₹40 billion (roughly $423 million) to secure an 8.2% equity stake in CtrlS. Second, the fund has pledged up to ₹30 billion (about $317 million) to establish a joint venture dedicated to constructing hyperscale data centre campuses throughout the country.
In this new joint venture, CPP Investments will hold a 48% controlling interest, while CtrlS retains the remaining 52% share, according to a joint statement released by both entities.
Why CtrlS matters for AI workloads
Established in 2007, CtrlS currently manages more than 15 data centres across India. Headquartered in Hyderabad, the firm has been aggressively expanding its footprint to satisfy the surging demand from cloud providers, enterprise clients, and increasingly, AI-specific workloads.
“As one of the world’s fastest-growing digital markets, India represents an important pillar of our global data centre strategy,” said Max Biagosch, global head of real assets at CPP Investments.
This is not CPP Investments’ first foray into the region. Having invested in India since 2009, the pension fund held net assets of approximately $20 billion in the country as of March 31, positioning it as one of the largest foreign institutional investors on the market. The pension fund noted it has been active in the data centre sector since 2017, building a portfolio of assets and joint ventures across major global markets.
Sridhar Pinnapureddy, founder and chief executive of CtrlS, stated that the partnership will enable the operator to expand capacity and construct infrastructure specifically tailored for the unique demands of AI workloads.
A crowded room in New Delhi
The CPP-CtrlS agreement is merely the latest entry in a race to fund India’s data centre sector. Earlier this month, AirTrunk, backed by Blackstone, announced plans to invest $30 billion to construct five gigawatts of data centre capacity in India by 2030. Meanwhile, Meta recently partnered with Reliance Industries on a 168-megawatt AI-enabled data centre in Gujarat.
Major technology firms including Amazon, Google, Microsoft, OpenAI, and Uber have also recently announced investments in the region, driving operators to rapidly expand capacity amidst a global competition for AI infrastructure.
New Delhi is actively positioning itself as a global hub for digital infrastructure through policy measures. These include tax exemptions for foreign cloud providers on services sold overseas through 2047, provided the workloads are executed from data centres physically located within India.
Domestic conglomerates are accelerating their own expansion plans to capitalise on the opportunity. The Adani Group and Tata Consultancy Services have unveiled major data centre projects aimed at supporting AI and cloud workloads. In 2023, CtrlS alone announced plans to invest $2 billion over six years to expand its footprint across the nation.
The gap between hardware and models
While the physical buildout of data centres proceeds apace, India’s progress in developing frontier AI models has not kept pace. Although the country hosts a handful of startups building indigenous AI models, such as Sarvam, much of the underlying technology used by Indian companies continues to be supplied by US firms.
Furthermore, this rapid expansion of data centres is expected to intensify pressure on electricity and water resources, highlighting significant challenges that could accompany India’s ambitions to become a major AI infrastructure hub.
Key takeaways
- CPP Investments is injecting up to ₹70 billion into CtrlS to build hyperscale data centres, securing a strategic foothold in India’s AI infrastructure boom.
- Major global tech firms and investors are converging on India, driven by New Delhi’s policy incentives and the need for physical compute capacity.
- Despite the hardware surge, India still relies heavily on US firms for underlying AI technology, creating a potential bottleneck in the local AI development ecosystem.
- The rapid data centre construction poses environmental risks, particularly regarding strain on India’s existing electricity and water supplies.
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