California’s Data Dream, India’s Debt

India’s Data Centre Demand Curve is in California. The Debt Lives Here.

By Dev Chandrasekhar

Every few weeks now, another gigawatt is announced. An American cloud giant commits billions to an Indian region. A real estate developer discovers it was a digital infrastructure company all along. A state government signs a memorandum promising land, power and single-window clearances for an AI city. 

The numbers have acquired the pleasant unreality of a boom. 

India's operational data centre capacity, roughly 1.5 GW today, is supposed to triple or quadruple by 2030, with announced pipelines — Visakhapatnam, Jamnagar, Navi Mumbai, Hyderabad, Chennai — that comfortably exceed everything built in the previous two decades combined.

There is a genuine story underneath the froth. 

Rules that keep Indian data on Indian soil, the payments system, streaming, companies moving to the cloud — these generate real, contracted, rupee-denominated demand, and the data centre landlords who grew on it have decent economics. But that is not the story being financed in 2026. 

The step-change in the pipeline — the part that turns a Rs 200-billion industry into a Rs 2,000-billion one — is artificial intelligence capacity. GPU halls. Liquid-cooled, power-dense, built for AI training runs and usage that do not yet exist in India at any scale that would justify them. 

Not all of the announced pipeline is this speculative AI capacity; a large share is conventional colocation with AI-capable halls built in, underwritten by contracted enterprise and cloud tenants. It is the incremental, purpose-built AI capacity, leased to no one yet, that carries the risk this column is about.

Two questions, then: whose demand assumption is this, and whose balance sheet carries it?

Two Buildouts, Two Capital Structures     

Follow the money in the American AI buildout, and you find, mostly, the deepest corporate balance sheets in history. 

Microsoft, Alphabet, Amazon and Meta — the hyperscalers — will together put something north of half a trillion dollars into land, buildings and chips in 2026 if their public forecasts hold, funded overwhelmingly by the cash their businesses throw off: $100 billion a year per company. 

Where debt has crept in, it has crept in carefully quarantined, handed to investors who are paid to take it, in a market with brutal feedback loops. When a listed GPU-rental company's shares halve, that is the system working.

The Indian buildout runs on a different balance sheet entirely. 

The developers are not hyperscalers. They are data centre landlords, conglomerate infrastructure arms, and — increasingly — real estate companies executing a pivot. 

Their model is the model Indian infrastructure has always run: three or four rupees of borrowed money for every rupee of their own, lent by groups of banks against the project itself, refinanced with bonds once the facility is leased and earning. 

SBI and the large private banks are lending; the country's largest bank has gone as far as building a dedicated project-finance unit for AI-era industries.

Why Is This A Problem? 

The state power-sector lenders — PFC and REC, their mandates freshly widened to lend beyond electricity — are sanctioning loans. Domestic private credit funds are taking the riskier middle layer, the slice that banks decline. 

Listed developers are selling new shares on the strength of the story, and bondholders are buying bonds backed by facilities that are, in many cases, not yet leased. 

Where global capital does arrive — Canada's CPP has committed a billion Canadian dollars to a CtrlS partnership — it arrives as equity. The debt is local. Which is another way of asking who bears the downside. 

Foreign equity can be written to zero without a domestic casualty; local debt cannot. If the demand does not arrive, the loss surfaces first with the Indian banks, NBFCs and bondholders who funded the build, and then, through committed power, with the wider system.

This is the asymmetry buried in every glossy pipeline chart. 

The American AI trade is an equity bet made by companies that can afford to be wrong. The Indian AI trade is a debt-heavy infrastructure bet — financed on Indian balance sheets, priced off demand assumptions minted in California.

Cut Lead Review From Hours To Minutes

Sign up for a free trial of Attio, the agentic CRM.

Ask Attio to build a daily workflow that surfaces the deals that need your attention today, like anything with a stage change, a recent reply, or a new signal in the last 24 hours.

Review your pipeline in Claude, synced live from Attio via MCP.

That's it.

Try Attio Now

1.63 million tonnes

That is how much petrol India's three state-run fuel retailers sold in the first half of July, up 22.9% from a year earlier, as below-normal monsoon rainfall boosted demand from farmers and motorists. Diesel sales rose 20.9% year-on-year to 3.46 million tonnes over the same period, though both fuels saw sales dip from June's holiday-driven highs.

Context: The late arrival of monsoon rains pushed farmers to rely on diesel-run pumps for irrigation, reversing the usual seasonal slowdown in fuel demand. Diesel, a key gauge of economic activity, remains well above pre-pandemic levels for the same period.

Setting: Jet fuel sales edged up 0.7% but stayed below June's levels. LPG sales fell 17.5% year-on-year, though they rose 1.7% from June after restrictions imposed during the West Asia crisis were lifted this month.

India Suspends Hormuz Sailings

India has directed shipping companies and recruitment agencies to stop deploying Indian seafarers on vessels sailing through the Strait of Hormuz, as the war in the region intensifies. The Directorate General of Shipping issued the order, citing a sharp rise in danger to crews and vessels operating in the area.

The move follows the deaths of two Indian seafarers in vessel attacks over the past three days.

Context: The war between Iran and the US reportedly intensified sharply on Thursday, with the US launching two major air strikes a day earlier.

Overview: Ship masters have been told to stay alert to security developments and track navigational warnings closely. India has also lodged a formal protest with Iran, summoning its deputy ambassador over one of the deaths.

India supplies over 300,000 seafarers globally, more than any country besides two others.

No Good News For India’s IT

Indian IT services sector revenue growth is set to remain at 1-3% this fiscal and 2-4% next fiscal, as AI-driven disruptions, weak discretionary spending and geopolitical uncertainties deepen a four-year slowdown, according to a Crisil Ratings analysis of India's top 26 IT companies.

Background: The slowdown traces back to FY24, when industry growth halved to 3.8% from 8.4% in FY23, as clients in the US and Europe, which account for over 80% of Indian IT revenue, pulled back on discretionary spending.

In FY25, TCS, Infosys and HCL Tech reported annual revenue growth of just 3.8% to 4.3%.

Rising adoption of AI-native solutions is intensifying pricing pressure, triggering deal renegotiations and slowing execution as clients reassess technology spending, Crisil said.

By The Numbers: Operating margins are expected to hold at 22-23% this fiscal, supported by rupee depreciation of 5-7% and prudent resource management, but could narrow from next fiscal as revenue pressures persist and AI investments continue, Crisil said.

Mid-tier IT firms have outperformed larger peers with double-digit growth but are expected to moderate to high single digits.

New Norms To Cut Car Emissions

The Ministry of Power on Thursday released draft Corporate Average Fuel Economy 2027 Norms (CAFE-III) for public feedback, as India steps up efforts to cut vehicular emissions and push automakers toward more fuel-efficient models. The norms will replace the existing CAFE-II framework, which expires on March 31, 2027. Stakeholders can submit suggestions within 21 days.

This fresh draft comes as a revised version of the initial draft that was floated in September 2025, which was followed by multiple rounds of industry consultations and iterations.

Catch Up Quick: Under the new draft, compliance will be assessed in two blocks, an initial three-year phase followed by a two-year phase, with fuel consumption targets progressively tightened. The gradual phase-in is meant to give manufacturers time to plan and invest in cleaner technology.

Setup: In a notable shift, and amid intense public debate over the pace of India's ethanol and biofuel blending push, the new norms will for the first time give carmakers credit for using cleaner fuels like ethanol, bio-fuel and compressed bio-gas.

Adani Nicotine Row

India's customs department has formally joined the Central Drugs Standard Control Organisation's (CDSCO) legal challenge against Adani Airport Holdings over the sale of nicotine pouches at Mumbai airport's duty-free shops.

The Lead: In an affidavit before the Bombay High Court, customs argued that duty-free stores enjoy tax concessions but must still comply with Indian laws, rejecting Adani's claim that products sold to international travellers fall outside the country's regulatory framework.

"The concept of goods being 'outside customs frontiers' for taxation purposes does not grant immunity from regulatory controls," customs said in a June 22 court filing.

How We Got Here: The dispute began after CDSCO, India's national drug regulator, found imported nicotine pouches, including Zyn and White Fox, on sale without regulatory approval.

Nicotine pouches are among the world's fastest-growing nicotine products, with demand surging in markets such as the US. However, India has not approved them for sale. And, Adani has reportedly imported more than $35,000 worth of Zyn and White Fox nicotine pouches since August.

Go from AI overwhelmed to AI savvy professional

AI will eliminate 300 million jobs in the next 5 years.

Yours doesn't have to be one of them.

Here's how to future-proof your career:

• Join the Superhuman AI newsletter - read by 1M+ professionals

• Learn AI skills in 3 mins a day

• Become the AI expert on your team

Start learning AI now

Indian Markets Steady Even Global Markets Are Volatile

On Episode 929 of The Core Report, financial journalist Govindraj Ethiraj talks to Sanjay Notani, Partner at Economics Law Practice (ELP).

• Indian Markets Steady Even Global Markets Are Volatile

• Voltas Raises Prices, More Brands Could Follow

• A Lot Of Money Is Locked Up In Security Deposits For Taking Homes On Rent, How Much Comes Back?

• The India-UK FTA Kicked Off On Wednesday, What Are The Early Signs Looking Like?

• Can Agentic AI Take Over Your Shopping?