Building data centres in India far cheaper than in U.S., drawing global hyperscalers: Raju Vegesna

Building a data centre in the United States costs 2.5 times more than in India, making the latter a favoured destination for hyperscalers worldwide, Raju Vegesna, Chairman and Managing Director, Sify Technologies, said on Thursday (February 12, 2026).

When it came to building data centres, India was globally one of the most cost-effective in terms of cost per mega watt, Mr. Vegesna said, during a fireside chat with John Xavier, Tech Editor, The Hindu, on the topic ‘Powering India’s AI Future: Data Centres, Capital, and the Race to Scale’ as part of The Hindu Tech Summit 2026. The summit, hosted by The Hindu, is presented by Vellore Institute of Technology and co-presented by Sify Technologies.

“In India, the labour cost, and the costs of steel and cement are cheaper. Also, most of the things needed to build data centres such as transformers, cooling systems, and electrical accessories are all manufactured in India, even though they are being made by MNCs,” he said. “Today, if you compare the U.S. and India, the U.S. costs two-and-a-half times more,” Mr. Vegesna added. “Similarly, in terms of power, we are about 40% cheaper compared to the U.S.”

That, he said, was the reason why the hyperscaler companies were interested in coming to India to offer their services to the rest of the world. This was an advantage since it would help build a big ecosystem. Having a data centre with AI services would lead to the creation of institutions for training and knowledge transaction.

On the downside, the kind of investment required for building a hyperscaler platform is not possible in India, which necessitates looking at other hybrid models ensuring co-existence of hyperscalers and private data banks, Mr. Vegesna observed. “Over time, as we build our infrastructure and applications, India can also come up with hyperscaler entities,” he maintained.

Welcoming the tax holiday announced in the Union Budget 2026-27 for building data centres in India, Mr. Vegesna said this would enable India to bill the data centres that set up shop here. Besides, setting up a data centre required skilled manpower, right from the design and construction stages.

Outlining his experience with respect to tackling obsolescence, he said that the company invested on flexible plumbing that could accommodate any kind of server in the server hall. “We are not a build-to-suit-customer kind of a data centre. We are a full-grown co-location service provider. That means you just move your rack into our data centre and then plug and play,” he said.

Asked about India’s evolution pathway, Mr. Vegesna said that India’s opportunity lay in how the country could transform from IT services to AI services. “Opportunities come only when there is a break, a technology change. For me, this is the greatest opportunity for India after Y2K. How fast we move matters,” he asserted.