AI data centre boom draws two companies to server manufacturing in India

Rising investments in AI-focused data centres are driving interest in local AI server manufacturing, with two companies planning facilities in India as policy incentives, global tech investments and semiconductor advances strengthen the country’s end-to-end AI and hardware ecosystem.

India’s expanding artificial intelligence data centre footprint is beginning to reshape its hardware manufacturing landscape, with two companies planning to set up AI server manufacturing units in the country. Union Minister for Electronics and Information Technology Ashwini Vaishnaw said the proposed facilities are a direct outcome of the rapid pace at which AI data centres are being developed across India.

Speaking on February 7, Vaishnaw said large-scale investments in AI data centre infrastructure are creating downstream demand for servers, electronic boards and related components. “When AI data centres are getting set up in India, one direct consequence is that companies now want to manufacture AI servers locally,” he said, adding that announcements related to the projects are expected in the coming months.

Policy push and rising investments

The minister’s comments come soon after Finance Minister Nirmala Sitharaman announced a major incentive in the Union Budget, proposing a tax holiday until 2047 for foreign cloud service providers using data centre infrastructure located in India. The move is aimed at positioning the country as a global hub for cloud and AI infrastructure.

Over the past year, several global technology firms have unveiled plans to invest heavily in AI-oriented data centres in India. Among the most significant is Google’s proposed $15-billion, gigawatt-scale AI data centre campus in Visakhapatnam, Andhra Pradesh, which is expected to generate over 100,000 jobs during construction. Officials estimate that following recent policy announcements, investments in India’s data centre sector could rise to $200 billion, up from about $70 billion currently under execution.

Globally, AI server manufacturing remains dominated by Taiwanese original design manufacturers such as Foxconn, Quanta and Wistron, along with established brands including Dell, HPE and Lenovo. Platforms and processors are largely defined by Nvidia, AMD and Intel. India’s push aims to capture a portion of this value chain domestically.

Jobs, manufacturing and the AI stack

Addressing concerns that data centres generate limited employment, Vaishnaw pointed to broader ecosystem effects. He cited comments by Nvidia CEO Jensen Huang, who recently said AI infrastructure could replicate the scale of job creation seen when the internet expanded in India, particularly through manufacturing and services.

According to Vaishnaw, as advanced printed circuit board manufacturing scales up locally, full server assembly is likely to follow. He said AI data centres are emerging as a major growth engine, supporting startups and service providers that rely on large-scale computing power.

The minister was speaking at a Qualcomm Technologies event that marked the successful tape-out of a 2-nanometre chip design through the company’s India engineering centres. He said such semiconductor milestones align with India’s broader ambition to build strength across the entire AI stack—from chips and servers to infrastructure and skilled talent.