American technology giants between India's growing business stress prevents data center deals with India

American technology giants like Amazon, Microsoft, and Google are increasing their hesitation in finalizing major data center leasing agreements in India because bilateral trade stress is increasing and there are no signs of it easing. This case started in a cautious deadlock, where high-powered stalemates — the companies conducting a cautious deadlock in August — rethinks on time limits.

Alok Bajpayee, India's Managing Director of NTT Global Data Centers, said, "The pipeline remains strong, but the work is going on with contracts." He further said, "Hyperscalers are considering the full range of risks, from interruption to the dynamics of talent." According to the latest estimates of Anarock Capital, hyperscalers currently run about 30% of India's data center demand, and this figure is expected to increase to 35% by the end of the year. Even so, new contracts have been stalled for more than 90 days, and industry experts hope that they will be reviewed in the next four to eight months.

This hesitation is emerging in the backdrop of stress in US-India relations. At the end of July, President Donald Trump imposed a 25% "reciprocal" tariff on Indian imports, which increased to 50% by the end of August. This tariff was imposed in retaliation for buying oil at discounted rates from Russia. This is the highest tariff imposed on any American business partner, which includes a significant technical component such as semiconductors and server hardware, worth about $48.2 billion. While working in this fire, the new H-1B visa applications have troubled Indian technical staff, who are heavily dependent on this program for appointments in the US.

At Argus Partners, the partner of Technology and Data Privacy Practice, Jitendra Soni, said, "Tariffs are reversing the global supply chains, increasing the cost of equipment by 15–20%, and reducing forecasts." He further said, "For data centers, it means renegotiating every section — from tariff pass-through to security and phased capacity rollout." Soni further said that these provisions, which were rare, are now inevitable in contracts, as operators prepare for instability.

Nevertheless, the data center sector in India is ready for rapid growth. Due to the demands of e-commerce, cloud computing, and AI, the capacity is expected to rise from the current 1.2 gigawatts (GW) to more than 3.5 GW by 2030. The hyperscaler segment alone is expected to reach revenue of $14.84 billion this year, increasing at a 31% compound annual growth rate (CAGR) by 2030. Lower operating costs — up to 30% below the global average — and increasing digital adoption, with data consumption in 2026 estimated to exceed 25 exabytes per month, are keeping this market attractive.

Challenges like the lack of GPUs have further increased the business crisis. According to property consultants, the growing demand for NVIDIA and AI accelerators has delayed deliveries by 20–30%. Now, the US duty on Indian electronics imports is increasing procurement obstacles and raising costs.

In some specific deals hanging in the balance, Google’s conversations with Andhra Pradesh are seeking partners for a similar project through discussions with OpenAI. Amazon Web Services (AWS) and Microsoft Azure, which together hold more than 40% of India’s cloud market, have also introduced multi-year leases worth millions of dollars. An anonymous executive of a major hyperscaler said, "We are not against India — its infrastructure is unmatched. But we are making legal preparations to deal with the next shock."

The H-1B duty targeting new applicants outside the US impacts India’s $254 billion IT industry. Last year, Indians received 71% of H-1B approvals, which supported American tech centers. According to Crisil Ratings, entry-level appointments could be reduced by 50%, affecting Indian IT margins by 10–20 basis points — although companies like Infosys and TCS, which have 90% onshore operations, are expected to see minimal decline. On a broader scale, there is a 15% decline in Indian student enrollments in American universities and a shift of talent toward Canada, Britain, and Germany, which are rapidly expanding skilled labor programs.

The debate on X is heated. Users are condemning the tariffs, calling them a "talent tax" that interrupts American innovation, while others describe them as a boon for India’s domestic tech ecosystem. An analyst posted, "It may mean more workload for Bengaluru and Hyderabad," echoing the views of companies like LatentView Analytics, which have denied any financial loss.

Despite the chill, optimism remains. Soni emphasizes, "India’s strategic value is intact. Once clarity comes — perhaps after the mid-term elections or once an agreement is reached — the negotiations will soften." Recent US-India talks, including Quad summit conferences, indicate diplomatic thawing, but experts warn that uncertainty could hinder the annual bilateral trade of $190 billion.

At the moment, this pause underlines the delicate period of US-India technological cooperation: hyperscalers need India’s scale, but trade tensions pose a risk of rupture. As a consultant joked, "The pen is hovering — will it sign, or seek safer shores?"

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