West Asia crisis forces rethink of AI infrastructure, puts India in focus

The modern cloud was designed to survive outages and not missiles.

When drone strikes hit Amazon Web Services data centres in West Asia earlier this month, it did more than disrupt servers. It forced governments and companies to confront an uncomfortable question; what happens when the infrastructure powering AI, banking and governments becomes a wartime target?

Industry leaders say the fallout is already reshaping how companies think about cloud geography, resilience and sovereignty.

India emerges as a “safe harbour”

For Sunil Gupta, Co-founder, CEO and MD of Yotta Data Services, the shift is already underway. “There seems to be a clear strategic shift of cloud and AI workloads from the West Asia to India, triggered by regional instability and physical strikes on data centres in the region,” Gupta told Business Today. 

He added that India is increasingly being seen as a “safe harbour” for critical digital infrastructure, backed by surplus capacity and connectivity advantages.

“India has emerged as a safe harbour for these critical operations… making it the primary destination for firms looking to reroute high-priority AI training, inferencing, financial services and enterprise workloads away from the conflict zone,” he said. 

According to Yotta, India could realistically absorb 15–20% of Gulf workloads in the next 3–6 months, supported by available colocation capacity and GPU infrastructure. 

Not just rerouting, but a structural rethink

Policy experts caution that while India stands to benefit, this is not merely a short-term diversion of traffic.

“The March 1 AWS data centre strike in the UAE was unprecedented. It showed that current cloud systems… are not built to withstand geopolitical shocks,” said Sumeyesh Srivastava, Partner at public policy firm The Quantum Hub. 

He stressed that India’s rise as a data centre hub was in the making even before the conflict, driven by domestic demand and regulatory push.

“India was already on a strong data centre growth trajectory… What the disruption does is compress timelines,” Srivastava told Business Today.

“Enterprises that were treating geographic diversification of cloud infrastructure as a medium-term priority are now making it an immediate one,” he added.

That shift is less about replacing one region with another and more about spreading risk, he said.

From data sovereignty to compute sovereignty

One of the biggest shifts emerging from the crisis is the growing importance of “compute sovereignty”.

“Data can be rerouted if flows are disrupted. Compute cannot. If a data centre is physically compromised, that capacity is simply gone,” Srivastava said. 

Gupta echoed this, saying control over compute infrastructure is now central to AI competitiveness.

“Compute sovereignty is rapidly becoming as important as data sovereignty… the real value creation happens during model training and inference,” he said. 

India’s opportunity and its limits

For Amit Sarin, Managing Director at Anant Raj Limited, which operates cloud infrastructure through its subsidiary Anant Raj Cloud, the West Asia disruptions are reinforcing a longer-term shift toward resilient infrastructure.

“Recent disruptions… are prompting enterprises and hyperscalers to reassess geographic risk… reinforcing a longer-term shift toward more diversified and resilient infrastructure across stable regions,” Sarin said. 

He added that India is “steadily emerging as a credible alternative within the Asia–Europe digital corridor,” supported by policy stability and expanding infrastructure. 

However, both industry and policy voices point to constraints.

Power remains the biggest bottleneck. Srivastava warned that data centres could consume around 3% of India’s electricity by 2030, stressing the need for grid upgrades and a reliable energy supply. 

Sarin highlighted additional hurdles, saying, “land availability, access to sustainable power, environmental clearances, and cross-border data flow policies will need continued attention.”

Beyond “backup hub” thinking

Experts also caution against positioning India as a failover location for global cloud.

“I would push back on the ‘backup hub’ framing,” Srivastava said. “India should… build an ecosystem that is attractive on its own terms: domestic market scale, regulatory clarity, and talent availability.” 

At the same time, policymakers must strike a balance between attracting hyperscalers and building domestic capability.

“If data is generated and processed in India but value accrues elsewhere, we are not capturing the full value chain,” he added. 

Sarin echoed a similar sentiment, noting that India must “balance attracting global hyperscaler investments with strengthening domestic cloud and AI infrastructure capabilities.”

A new geography of the cloud

The deeper shift may not be about India replacing the Gulf or even competing with hubs like Singapore, but about the end of single-region dependency.

“This is a permanent structural shift toward geographically distributed cloud architecture,” Gupta said, arguing that redundancy across countries is becoming a baseline requirement.