India’s Growing AI and Data Center Industry: How Nuclear Power Can Meet the Rising Energy Demand
India’s AI and data center revolution is unfolding at breathtaking speed, promising to position the nation at the forefront of the global digital economy. With the Indian AI market projected to grow to over $17 billion by 2027—more than tripling its current size, according to Boston Consulting Group—and the data center industry poised to attract $20–25 billion in fresh investments over the next five to six years, according to Colliers India, the scale of digital transformation is unprecedented. Yet behind the rapid buildout of hyperscale facilities and AI-ready infrastructure lies a looming and formidable challenge—power. The rising energy demand is not only massive, but relentless, and could soon become the single greatest threat to sustaining this momentum. As conventional energy sources fall short, an unexpected contender is stepping into the spotlight: nuclear power. Could this be the game-changing force that secures the future of India's digital goals?
Government Policies Fueling the Digital Boom
India’s rapid growth in AI and data centers is driven by a strategic policy push from both central and state governments, aimed at boosting investment, innovation, and infrastructure.
National Data Center Policy Framework
The Indian government, through Ministry of Electronics & Information Technology (MeitY)’s Draft Data Centre Policy 2020, has established a robust foundation to promote data center development. The policy grants the sector "infrastructure status" to improve access to long-term financing and simplifies clearances for new projects. Key provisions include the development of dedicated Data Center Economic Zones offering affordable land and pre-approved clearances, along with recognition of data centers as essential services to ensure uninterrupted operations during crises. It supports the 'Atmanirbhar Bharat' initiative by encouraging domestic manufacturing of IT and non-IT data center equipment. States like Karnataka, Tamil Nadu, Uttar Pradesh, and Haryana complement the national policy with competitive incentives—financial subsidies on land and electricity, building norm exemptions, and single-window clearance systems—to attract investment.
The 'IndiaAI' Mission and Digital Ecosystem
The government’s flagship ‘IndiaAI’ mission, backed by over Rs.10,000 crore, aims to build a sovereign AI compute infrastructure with a network of 10,000+ GPUs, supporting Indian startups, researchers, and industries in AI development. This AI initiative aligns with broader digital transformation efforts. Programs like 'Digital India' and BharatNet—which targets broadband connectivity to all 2.6 lakh Gram Panchayats—are driving internet penetration and accelerating data generation, boosting demand for data centers. Public digital infrastructures such as Aadhaar, UPI, DigiLocker, and ONDC offer a scalable foundation for AI integration across sectors. A key focus of India’s AI strategy is the development of localized models for 22 official languages and numerous dialects, enabling wider AI accessibility and adoption.
The Titans of Indian Digital Infrastructure
India’s digital infrastructure is being driven by a powerful mix of global leaders and domestic specialists. Key players include AdaniConneX, Yotta Infrastructure, NTT, CtrlS Datacenters, Nxtra by Airtel, and STT GDC.
AdaniConneX is targeting 1 GW of data center capacity by 2030 under its capital management plan to power Digital India. Reliance Industries, in a landmark move, has announced the world’s largest data center in Jamnagar in partnership with Nvidia. Yotta Infrastructure, backed by the Hiranandani Group, is scaling from 33 MW to 890 MW with a focus on AI-ready facilities.
A defining trend is the rise of “power-aware” data centers purpose-built for AI workloads. RackBank’s 80 MW AI-optimized data center in Indore, with high-density racks supporting 50kW to 150kW, reflects this evolution. Unlike traditional models where energy was just an operating cost, power is now a core strategic constraint. Developers are shifting from real estate operators to integrated infrastructure and energy strategists, with power availability becoming the primary growth driver.
The Unprecedented Energy Demand: A Looming Constraint on Growth
India’s AI and data center boom, while showcasing its economic momentum, is driving an extraordinary surge in electricity demand. Unlike traditional growth patterns, this demand is non-linear—driven by the unique computational physics of AI and the unprecedented scale of infrastructure deployment. Energy is emerging as the single largest constraint on the future of India’s digital economy, making it critical to understand why conventional power solutions may fall short.
The Physics of Power: Why AI is an Energy Guzzler
AI workloads are inherently more energy-intensive than conventional computing. This stems from two demanding phases—training and inference. Training large language models (LLMs) requires thousands of specialized GPUs running non-stop for weeks or months. While training is periodic, inference—the real-time application of these models—is continuous and scaling rapidly. Inference workloads are projected to grow at a 122% CAGR globally through 2028, creating an enduring baseline of high power consumption.
AI servers consume up to 10 times more power than standard servers. Nvidia’s roadmap illustrates this trajectory clearly: rack power densities are set to rise from current levels to 180 kW with the Rubin platform, and further to 360 kW with its successor, Vera Rubin. By the early 2030s, racks consuming 1 MW may become standard. This marks a fundamental shift, requiring new approaches to data center design, power provisioning, and energy management.
Adding to the challenge is cooling. Up to 40% of a data center’s energy is used not for computation but to manage heat. As AI hardware pushes rack densities higher, the cooling burden increases exponentially—further amplifying total energy demand.
From Megawatts to Gigawatts: Quantifying India’s Data Center Power Demand
India’s data center capacity is projected to grow from 960 MW to 9.2 GW by 2030—a ninefold increase, according to Nomura. While data centers currently account for less than 1% of India’s electricity consumption, this could rise to 3% by the end of the decade.
This surge mirrors global trends. The International Energy Agency (IEA) estimates that global electricity demand from data centers will more than double by 2030 to 945 TWh—surpassing the total electricity consumption of Japan. The IMF further cautions that global data centers could consume as much electricity by 2030 as India does today.
In this new digital era, energy is no longer just an operational input—it has become the core strategic limiter. For India’s digital economy to scale sustainably, securing a reliable, clean, and abundant power supply is no longer optional—it is foundational.
India's Nuclear Renaissance: The Ultimate Solution
Confronting the immense energy demands of its AI and digital infrastructure expansion, India is launching a bold revival of its nuclear power sector. Central to this revival is the government's target of achieving 100 GW of nuclear power capacity by 2047—more than a twelvefold increase from the current 8.8 GW. This goal, formalized as the ‘Nuclear Energy Mission for Viksit Bharat’ in the Union Budget 2025–26, marks a decisive political and financial commitment to nuclear energy as a backbone of India’s clean energy future.
Currently, India’s installed nuclear power capacity is 1.81%. The country has a near-term goal of scaling up to 22.48 GW by 2031–32. The long-term 100 GW objective is not just an energy milestone—it is a cornerstone of the ‘Viksit Bharat 2047’ vision, which seeks to transform India into a developed economy exceeding USD 30 trillion. Achieving this level of economic expansion necessitates a reliable, scalable, and low-emission energy foundation—roles that nuclear power is uniquely positioned to fulfill.
Nuclear energy stands out for its unmatched reliability. With capacity factors exceeding 92%, nuclear plants outperform coal (54%), natural gas (55%), wind (37%), and solar (27%) in consistent power generation. Designed for continuous operation, nuclear reactors require minimal maintenance and can run for 18 to 24 months between refueling, ensuring steady supply for 24/7 critical operations like data centers.
Equally important is nuclear’s long-term price stability. Most of its cost lies in upfront capital and labor, with fuel expenses being negligible. This shields operators from the volatility of fossil fuel markets, enabling long-term Power Purchase Agreements (PPAs) that lock in predictable energy prices. For data center developers planning 20–40 year investments, this de-risking capability is a major strategic advantage, enhancing financial certainty.
Nuclear power’s minimal land footprint compared to solar or wind—required to generate equivalent energy—unlocks a powerful operational strategy: co-location. Modern reactors can be sited adjacent to large-scale data centers or even built behind the meter, directly powering facilities without relying on long transmission lines. This reduces infrastructure costs, minimizes energy losses, and creates resilient, secure power ecosystems isolated from grid vulnerabilities and external threats.
India is actively exploring this potential by repurposing retiring thermal power plant sites for new nuclear deployments. These locations already have critical assets—land, water access, and grid interconnectivity—significantly reducing the time and cost to deploy nuclear infrastructure. This approach not only supports energy transition goals but also revitalizes aging power assets in a future-ready manner.
Introducing SMRs and Bharat Small Reactors (BSRs)
At the forefront of India’s nuclear renaissance is the strategic push towards Small Modular Reactors (SMRs). Their defining characteristics offer significant advantages over traditional gigawatt-scale plants. The modular design enables key components to be manufactured in factories and transported to sites for assembly—cutting on-site construction time, enhancing quality control, and reducing costs through standardization and learning curves. The Indian government has placed SMRs at the core of its Nuclear Energy Mission. The Union Budget 2025–26 allocated ₹20,000 crore (approx. USD 2.4 billion) for SMR R&D, with a clear target of deploying at least five indigenously designed SMRs by 2033.
India is pursuing a two-pronged strategy for SMR development:
• Bharat Small Reactor (BSR): This is the immediate, commercially focused platform. The BSR is a 220 MW reactor based on India’s proven Pressurized Heavy Water Reactor (PHWR) technology. With decades of operational experience and a mature domestic supply chain, this design minimizes the technological and execution risks that typically challenge first-of-a-kind SMR projects. The BSR is a highly bankable model for private investors.
• Bharat Small Modular Reactor (BSMR): The concept design for the 200 MWe BSMR lead unit is complete, covering the nuclear reactor and primary heat transport system. Detailed engineering of both nuclear and non-nuclear systems is underway. Erection and start-up of the demonstration unit are expected within six years of financial approval, with full commissioning and operations in the seventh year. The projected cost of the lead unit is Rs. 5,700 crore.
• International collaborations on SMR:
– United States: A landmark agreement enables transfer of SMR technology from Holtec International to Indian partners such as L&T and Tata Consulting Engineers.
– France: A Letter of Intent has been signed with EDF to collaborate on SMR and Advanced Modular Reactor (AMR) co-development.
– Russia: Rosatom is in talks to deploy its SMR technologies in India, including floating nuclear plants and thorium-based designs.
Moving Forward
The convergence of India's digital aspirations and nuclear potential marks a pivotal moment in the nation's infrastructure evolution. As AI and data centers redefine the demands placed on the power grid, nuclear energy—especially through innovative pathways like SMRs and the Bharat Small Reactor—offers not just a solution, but a strategic enabler of sustained growth. Embracing nuclear power is no longer a question of energy diversification; it is a necessity for digital resilience, economic competitiveness, and technological sovereignty. A crucial milestone in this journey will be the 6th India Nuclear Business Platform (INBP) 2025, scheduled for 14–15 October 2025 in Mumbai. This premier forum will unite policymakers, global stakeholders, and industry leaders to shape the trajectory of nuclear energy in India. It will be a defining moment to align vision with action, and strategy with execution, as the country advances toward its ambitious goal of achieving 100 GW of nuclear capacity by 2047. How India aligns its nuclear roadmap with its digital ambitions will ultimately define its leadership in the emerging global tech order.
