India-US trade deal gives Indian data centres another growth push after Union Budget boost

This is the second booster shot for data centres after the Union Budget

Indian data centres are poised for a fresh demand uptick after India and the United States sealed the first tranche of a landmark trade deal.

“US Tech firms will (provide) cloud (services), (boost) data centre (demand), and (increase) AI services in India through Indian resellers,” Pareekh Jain, Founder of Pareekh Consulting and EIIRTrends, said.

This is the second booster shot for data centres after the Union Budget already provided several incentives, including a tax holiday until 2047, for the sector.

"The safe harbor announcement in the Budget was a game changer. Now, with the US trade relationship back on track... large US MNCs wanted to offshore more work will not hesitate. All in all... good for us," said Ajay Rotti, Founder & CEO, Tax Compaas.

Others were in agreement.

Apart from increasing demand, the India-US trade deal “also removes fears that India will build its own technology stack and not buy from US Tech companies. India will (now) continue to buy from US Tech companies such as Microsoft, Google, Amazon, Salesforce, Servicenow, Dell as per the trade deal,” Jain said.

These will be part of India's commitment to buying $500 billion worth of goods made in America.

“Prime Minister (Modi) also committed to ‘buy American' at a much higher level, in addition to over $500 billion of U.S. Energy, Technology, Agricultural, Coal, and many other products. Our amazing relationship with India will be even stronger going forward,” US President Donald Trump posted on social media on February 3.

Investors and fund managers see the deal as a continuation of strong ties between the two democracies.

"At a macro level, the deal signals strategic continuity in India’s trade policy and strengthens India’s positioning as a preferred partner amid ongoing global trade realignments," said Sonam Srivastava, Founder and Fund Manager at Wright Research PMS.

Apart from data centres in particular, the larger IT services industry also stands to benefit in the medium-term.

"If this signals a broader reset in US India economic cooperation, it strengthens India’s positioning as a strategic technology partner rather than just a low-cost delivery hub. That supports longer-term growth in engineering, AI services, and platform work, but it will not suddenly accelerate near-term revenue or margins," HFS chief executive officer Phil Fersht said.