Reliance and L&T Unveil $13.5 Billion Data Centre Investments

In a significant development for India's digital infrastructure, a joint venture owned by Reliance Industries Limited (RIL) and Larsen & Toubro (L&T) has unveiled plans to invest a combined $13.5 billion in data centres, driven by the growing demand for artificial intelligence (AI) applications. This announcement marks one of the largest single-day investments in India's digital capacity, contributing to a total of nearly $60 billion in data centre investments made this year.

Investment Details
On Wednesday, Digital Connexion, the joint venture between RIL and Canadian asset management firm Brookfield, along with US-based Digital Realty, announced a substantial $11 billion investment over the next five years. This investment will support the establishment of a data centre with a capacity of 1 gigawatt (GW) in Visakhapatnam, Andhra Pradesh. Concurrently, L&T announced its plans to invest approximately $2.5 billion to construct five data centres, including one in Visakhapatnam, with a combined capacity of at least 300 megawatts (MW).

Visakhapatnam: A New Data Centre Hub
The announcements position Visakhapatnam as a burgeoning hub for data centres in India, with over $26 billion pledged to establish facilities with a total capacity of at least 2GW by 2031. This development is poised to exceed the current national data centre capacity, which is estimated at 1.4GW by financial analytics platform S&P Global.

Industry experts suggest that large-scale data centres are emerging as a utilities-like business model for major Indian conglomerates, leveraging renewable energy and long-term financing strategies. Prashant Chiranjive Jain, head of the corporate centre at L&T, commented, "As AI ramps up, India’s potential for data centre capacity growth will not be limited to 5GW in the next decade. We expect the growth to be even faster, as the demand for sovereign AI loads increases."

Future Potential
Seema Ambastha, chief executive of L&T's data centre business, emphasised that Visakhapatnam will be one of five strategic locations for expanding data centre operations, citing its advantageous position with landing ports for subsea internet cables. L&T already operates in Chennai and Navi Mumbai, with plans to scale operations in Bengaluru and Hyderabad.

Digital Connexion has articulated its commitment to creating next-generation digital infrastructure through AI-centric, purpose-built data centres designed for high performance and sustainability. The venture has existing campuses in Chennai and is constructing another in Mumbai’s Chandivali area to ensure low-latency connectivity.

Analysts at Morgan Stanley indicated that the 1GW data centre operated by RIL is likely to be offered in a ‘data centre-as-a-service’ model, catering to both internal and external customers.

The New Landscape of Data Centre Management
Industry stakeholders observe that major conglomerates are reconfiguring the data centre landscape, transitioning from merely technology ventures to becoming essential utility providers. Sanchit Vir Gogia, CEO of Greyhound Research, highlighted that the growth of gigawatt-scale data centres demonstrates an understanding that the future of computing is increasingly reliant on the availability of electricity, cooling systems, and interconnectivity rather than just semiconductor production.

Gogia noted, "Reliance’s 3GW campus in Jamnagar, Adani’s 1GW project in Visakhapatnam, and TCS’s $7 billion investment into AI data centres are all focused on renewable power procurement and long-term financing rather than speculative real estate."

This strategic shift indicates a long-term alignment with policy and profitability, as local storage requirements and energy costs compel firms to prioritise local sourcing. As a result, Indian conglomerates are becoming the landlords of the data centre industry, with foreign cloud providers as their tenants. Gogia concluded, "The next wave of Indian data infrastructure will be led by conglomerates capable of underwriting megawatts, not just megabytes."

The announcements from Reliance and L&T not only underscore a significant investment in India's digital future but also reflect a broader trend of local firms taking a leading role in meeting the burgeoning demand for data services in the AI era.