Data Centres and the War: Why India Is Now in the Frame

On March 1, 2026, Iranian drones struck two Amazon Web Services data centres in the UAE and damaged a third in Bahrain. It was the first confirmed military attack on hyperscale commercial cloud infrastructure in history. Within days, Oracle's data centre in Dubai was also hit. The conflict had found a new kind of target.

For global technology companies, the strikes exposed a structural vulnerability that had been building for years: concentrating critical AI and cloud infrastructure in a single geopolitical zone. The response that followed is reshaping where data centre capital is headed next, and India is prominently in that conversation.

What Happened to the Data Centres

Iran's strikes on commercial data infrastructure were not incidental. The Islamic Revolutionary Guard Corps (IRGC) stated the AWS facilities were targeted for their suspected role in supporting US military and intelligence operations. The attacks were deliberate and sequenced.

The confirmed sequence of events:

• March 1, 2026: Iranian Shahed drones struck two AWS data centres in the UAE and a third in Bahrain. AWS declared "hard down" status across its UAE and Bahrain availability zones (ME-CENTRAL-1 and ME-SOUTH-1).
• March 31, 2026: The IRGC named 18 US technology companies as "legitimate targets," including Microsoft, Google, Oracle, Apple, Meta, Nvidia, IBM, and Cisco.
• April 1, 2026: A further Iranian strike caused a fire at the AWS Bahrain data centre.
• April 2, 2026: Iran claimed a strike on Oracle's data centre in Dubai.

The outages disrupted banking, payments, enterprise software, and delivery platforms across the region. Abu Dhabi Commercial Bank, Emirates NBD, First Abu Dhabi Bank, payments platform Hubpay, data cloud company Snowflake, and ride-hailing platform Careem all reported disruptions. AWS warned that recovery would be prolonged. For context on how this conflict affected FPI flows into Indian equity markets, see the article on FPI outflows in early March 2026.

Why India Is Now in the Frame

AWS and Microsoft began evaluating rerouting Middle East workloads to India and Singapore within days of the strikes. India's advantages in this context are structural, not coincidental. Three factors define them.

Proximity vs Remoteness: A Shift in Thinking

For decades, the logic of data centre placement was proximity. Companies wanted their data close, for control, latency, and regulatory compliance. The Gulf was attractive precisely because it sat at the geographic intersection of Europe, Asia, and Africa, with 17 submarine cables passing through the Red Sea.

The March 2026 strikes challenged that logic directly. When a single missile can take a hyperscale cloud region offline, the value of proximity is outweighed by the risk of concentration. The new argument gaining traction is distributed remoteness: keep critical operational data on local proximate servers, but shift back-up and archival capacity to geographically remote centres where geopolitical exposure is lower.

India fits that model. It is outside the active conflict zone, has strong submarine cable connectivity, and offers the scale required to absorb workload migration. The SCNX3 submarine cable system, backed by the US Trade and Development Agency, is planned to connect Chennai with Singapore, further strengthening India's data corridor. Data localisation rules in Gulf states restrict the migration of sovereign data, but back-up and secondary capacity migration faces no such constraints.

The Investment Flows Already Committed

Global technology majors had already committed large capital to Indian data centre infrastructure before the conflict. The war has added urgency to deployments that were already in motion.

India's cumulative data centre investment commitments reached $126 billion by end-2025 and are projected by CBRE to exceed $180 billion in 2026 as global operators accelerate deployment decisions following the Middle East disruptions.

The India Cloud Market in Context

The investment flows into data centre infrastructure are underpinned by a domestic cloud market growing at pace. India's public cloud services market generated $10.9 billion in revenue in 2024 and is projected to reach $30.4 billion by 2029, growing at 22.6% CAGR, per IDC's Worldwide Semi-annual Public Cloud Services Tracker. That trajectory is the organic demand base for data centre capacity in India. War-driven workload migration from the Middle East adds an external demand layer on top.

What This Signals

Key Takeaways

• Iran's drone strikes on AWS (UAE, Bahrain) and Oracle (Dubai) in March-April 2026 were the first confirmed military attacks on hyperscale commercial data centre infrastructure in history, forcing AWS to declare hard-down status across its Middle East cloud regions.
• AWS and Microsoft began evaluating workload rerouting to India and Singapore within days, driven by India's cost advantage ($6–7 million per MW vs $14–18 million in Singapore), 20-year tax incentives to 2047, and established hyperscaler presence.
• The logic of data centre placement is shifting from proximity to distributed remoteness: critical data stays local, back-up and secondary capacity migrates to geographically lower-risk locations.
• AWS has committed over $15 billion to Indian data centres (Mumbai and Hyderabad), Google $15 billion in Andhra Pradesh, and Microsoft $17.5 billion by 2030. India's cumulative data centre investment commitments are projected to exceed $180 billion in 2026.
• India's public cloud market stood at $10.9 billion in 2024 and is projected by IDC to reach $30.4 billion by 2029 at 22.6% CAGR, providing the organic demand base for continued infrastructure investment.
• Most major Indian data centre operators remain unlisted. The direct investment opportunity from this structural shift is currently concentrated in private operators and global hyperscalers rather than listed equity.

FAQs

1. What data centres were attacked during the US-Iran war?

Iran struck two AWS data centres in the UAE and one in Bahrain on March 1, 2026, the first confirmed military attack on commercial hyperscale cloud infrastructure. A further strike hit the AWS Bahrain data centre on April 1, and Iran claimed a strike on an Oracle data centre in Dubai on April 2. AWS declared hard-down status across its UAE and Bahrain cloud regions (ME-CENTRAL-1 and ME-SOUTH-1), with prolonged recovery expected.

2. Why is India considered a beneficiary of data centre relocation from the Middle East?

India offers data centre build costs of approximately $6–7 million per MW, roughly half the cost of Singapore and Japan. Combined with 20-year tax exemptions extending to 2047, strong submarine cable connectivity, and an established hyperscaler presence, India offers both the cost structure and the physical infrastructure to absorb workload migration at scale.

3. How much have global technology companies committed to Indian data centres?

AWS has committed over $15 billion across its Mumbai and Hyderabad regions, Google $15 billion in Andhra Pradesh, and Microsoft $17.5 billion for AI infrastructure in India by 2030. India's total cumulative data centre investment commitments reached $126 billion by end-2025 and are projected to exceed $180 billion in 2026, per CBRE.

4. What is the size of India's public cloud market?

India's public cloud services market generated $10.9 billion in revenue in 2024, per IDC. It is projected to reach $30.4 billion by 2029, growing at a CAGR of 22.6%, driven by enterprise cloud adoption, AI workloads, and expanding digital infrastructure.

5. Are Indian data centre companies listed on stock exchanges?

Most major domestic data centre operators in India, including Yotta, Nxtra, CtrlS, and NTT India, are currently unlisted. Listed companies with indirect data centre exposure exist in adjacent sectors such as power infrastructure, real estate, and telecom. Please consult a SEBI-registered investment adviser before making any investment decision based on sector trends.

6. Will the Middle East data centre hub recover after the conflict ends?

Analysts expect existing Gulf infrastructure to remain operational and investment to continue once the conflict de-escalates. However, the March 2026 strikes have altered how companies model geopolitical risk in site selection. Future investment rounds are expected to favour more geographically distributed capacity, with India, Malaysia, and other locations likely to receive a larger share of the next wave of deployments.

Disclaimer: This article is for general information and educational purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell any securities or financial instruments. Data on data centre investments, cloud market size, and geopolitical events are sourced from publicly available reports including CBRE India Alternate Sectors Outlook 2026, IDC Worldwide Semi-annual Public Cloud Services Tracker (updated July 2025), Vestian data centre report (April 2026), Data Center Dynamics, Fortune, The Conversation, and media coverage of the March-April 2026 US-Iran conflict. All figures are announced commitments and are subject to revision. Past trends in infrastructure investment and market growth are not indicative of future outcomes. Investors should not make any investment decision based solely on this article. Please consult a SEBI-registered investment adviser or qualified financial professional before making any investment decision.