India Can Lead Global Digital Infrastructure with Data Embassies Model: PwC

A major opportunity lies within India to play a leading role in innovation related to digital infrastructure globally. According to a new PwC report, if India adopts emerging models like Data Embassies and Data Cities, it can become a trusted digital hub for the world.

As reported, a 'Data Embassy'-like arrangement can be made available by India to foreign governments in international bodies. It will need a tax-free zone, sovereign immunity provisions, and robust cybersecurity guarantees. Therefore, by doing so, India can emerge as a trusted country for hosting important data on foreign lands.

The development of data cities is also advocated by PwC. The data cities will be special cities or hubs that will host data centers, cloud service providers, AI labs, and digital services that will be governed by a single policy and taxation framework. Targeted incentives, regulatory sandboxes, and ready infrastructure will make it easier for companies to start and expand their businesses in India.

According to the report, the combined impact of data embassies and data cities will create a robust ecosystem that will attract global capital, accelerate innovation, create quality jobs, and strengthen India's position in the global digital value chain.

The report states that India's digital economy contributed 11.74 percent (approximately $0.402 trillion) to GDP in fiscal year 2022-23. This share is expected to grow at almost twice the overall growth rate of the economy and could reach nearly 20 percent of national income by fiscal year 2029-30, exceeding agriculture and manufacturing.

With digital adoption, demand for data centers in India has increased nearly ninefold. Currently, the country's installed data center capacity is 1.5 GW, which is projected to grow at an annual rate of 20-24 percent between 2025 and 2035. By 2035, total capacity could reach approximately 14 GW, with domestic and global investors playing a significant role.

PwC also noted that the cost of building data centers in India is lower than in hubs like Singapore, Taiwan, Malaysia, and South Korea. Furthermore, India's ability to generate clean energy is a major plus, as reliable and sustainable power is crucial for data centers.

The report concludes that an investor-friendly, clear, and predictable tax and regulatory environment is essential for sustainable growth in this sector. Clear tax policies throughout the project lifecycle will play a key role in boosting investor confidence and making India a future-ready digital hub.