How India’s Power Sector Quietly Became the Backbone of Its Data Centre and Startup Boom

A decade ago, power cuts were an accepted reality for Indian businesses. Diesel generators hummed through long outages, infrastructure planning came with a built-in assumption of unreliability, and energy-intensive industries thought twice before scaling operations in the country. Today, that story has dramatically changed—and in ways that could define India’s next phase of digital and startup-led growth.

India is now positioning itself as a global destination for data centres and Global Capability Centres (GCCs), riding on the back of a power sector transformation that has moved from chronic shortages to reliable, scalable and increasingly clean energy. Speaking during a media interaction on Monday, Commerce and Industry Minister Piyush Goyal outlined how a once-fragile system has evolved into one of the world’s largest integrated power grids—creating strong tailwinds for the technology ecosystem.

From Power Scarcity to Power Confidence

When Prime Minister Narendra Modi took office in 2014, India’s power sector faced structural challenges. Frequent outages disrupted industrial productivity, renewable energy capacity was limited, and grid infrastructure lacked the resilience required for modern economic demands. For startups, manufacturers, and technology companies, electricity reliability was often a bottleneck rather than a foundation.

Over the last 11 years, that equation has flipped. According to Goyal, India has transitioned from power scarcity to power security—and is now moving decisively toward power sustainability. The country today offers reliable, affordable electricity across households, farms, factories, and increasingly, large-scale digital infrastructure.

At the heart of this shift is India’s single, integrated national power grid, now operating at a scale of nearly 500 gigawatts, making it one of the largest in the world.

“This massive, integrated grid allows India to efficiently manage redundancy and sudden surges in demand,” Goyal said, calling it a critical advantage for energy-hungry sectors like hyperscale data centres and global tech back offices.

Why Data Centres Are Watching India Closely

Data centres require something non-negotiable: uninterrupted power at scale. Even momentary disruptions can cause massive financial and operational losses. The ability to handle peak loads, backup requirements, and long-term demand growth is essential—and this is where India’s unified grid is becoming a decisive factor.

With the ability to absorb sudden spikes in electricity consumption and redistribute power across regions, India’s grid now meets global benchmarks for digital infrastructure readiness. According to the Minister, comprehensive planning is underway to ensure adequate power supply not just for data centres, but for households, agriculture, industry, commercial establishments, and the expanding digital economy—all simultaneously.

This balance is particularly important as India witnesses rapid growth in cloud services, AI workloads, fintech platforms, and enterprise software operations, many of which are anchored by data centres and GCCs.

Renewable Energy at an Unprecedented Scale

A major driver of this transformation has been India’s aggressive push toward renewable energy. Since 2014, solar power capacity has increased nearly 46 times, while wind power capacity has grown about 2.5 times. India now ranks as the world’s third-largest solar power producer, a milestone that few would have predicted a decade ago.

This clean energy push is not just about sustainability—it is also about cost competitiveness and long-term energy security. As data centres increasingly seek green power commitments to meet global ESG standards, India’s expanding renewable footprint strengthens its appeal as a hosting destination.

At the same time, India has emerged as the fourth-largest petroleum refining hub globally, with plans to expand refining capacity by 20 per cent, ensuring energy availability across multiple sources during the transition phase.

Coal Rationalisation and Cost Control

While renewables are growing rapidly, India has also strengthened its conventional energy backbone. The country recorded its highest-ever coal production of 1,048 million tonnes in FY 2024–25, even as coal imports declined by around 8 per cent. This reduction has helped conserve foreign exchange and stabilise power costs.

Goyal noted that rationalisation of coal linkages and improvements in supply chains have enhanced efficiency and kept power tariffs under control—an important factor for startups and industries operating on tight margins.

Nuclear Energy Enters the Spotlight

Looking ahead, nuclear energy is set to play a much larger role in India’s power strategy. Referring to the SHANTI Bill, currently before Parliament, Goyal said the proposed legislation aims to accelerate nuclear power development by enabling participation from both public and private players, including through public-private partnerships.

A key focus of the Bill is the deployment of small modular reactors (SMRs), which could offer reliable, round-the-clock clean power—especially critical for data centres that cannot rely solely on intermittent renewable sources.

According to the Minister, a mix of solar, wind and nuclear energy will be essential to meet India’s rising electricity demand while steadily increasing the share of clean energy in the overall power mix.

Power Reforms with Social Impact

Beyond industry and infrastructure, power sector reforms have had deep social and economic implications. Under the Saubhagya scheme, electricity access has been extended to every household in the country. Meanwhile, 47.4 crore LED bulbs distributed under the UJALA programme have reduced both electricity bills and carbon emissions.

Energy access has also been strengthened in rural India. Clean cooking gas connections have reached 10 crore households, while schemes like PM-KUSUM have improved energy security for farmers and supported solar adoption in agriculture.

Measurable Outcomes of Reform

The results of these reforms are visible in hard numbers. Power shortages have declined sharply—from 4.2 per cent in 2013 to just 0.1 per cent in 2025. Financial stress in the power distribution sector has eased, with reforms under PM-UDAY significantly reducing DISCOM dues.

India has also achieved a global climate milestone, becoming the first G20 country to meet its Paris Agreement targets, with 50 per cent of installed power capacity now coming from non-fossil fuel sources.

Powering Viksit Bharat 2047

As India looks toward its long-term vision of Viksit Bharat 2047, energy planning is being recalibrated to match future growth. Initiatives such as the National Green Hydrogen Mission and the PM Surya Ghar scheme aim to address emerging challenges while reinforcing sustainability.

Goyal expressed confidence that India’s energy sector will increasingly be seen as a global case study—one that demonstrates how scale, speed and sustainability can be managed together.

For startups, data centre operators, and global tech investors, the message is clear: India’s power story is no longer a risk factor. It is fast becoming one of the country’s strongest competitive advantages—quietly powering the next wave of digital infrastructure and investment-led growth.