Cables and cooling bring AI windfall to Indian suppliers
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Fibre-optic cable producers in India have been among the biggest beneficiaries in the global AI boom.
PHOTO: AFP
MUMBAI – At a bustling factory in western India, technicians work around the clock to turn glass into hair-thin fibre-optic strands for data centres powering the global artificial intelligence boom.
Indian manufacturers are cashing in on the AI infrastructure build-out by supplying cables, power systems and cooling equipment – even as investors worry the country is falling behind in the race to develop the technology.
Analysts at Nomura describe it as a classic “picks and shovels” trade, a riff on how selling tools during a gold rush can earn people more than searching for the precious metal.
For Sterlite Technologies managing director Ankit Agarwal, serving the world’s biggest tech companies is a dramatic shift for his firm, formerly a supplier to telecoms networks.
“This is a once-in-a-lifetime opportunity,” said Agarwal.
India has enthusiastically adopted AI, but has yet to produce globally competitive models and is dependent on imported advanced semiconductors.
Investors fear that generative AI could disrupt the country’s US$315 billion (S$404 billion) IT services industry by automating tasks long outsourced to India, such as customer service and app maintenance.
These worries have weighed on markets, with the benchmark Nifty 50 down around 7 per cent in 2026 and foreign investors pulling over US$27 billion from Indian equities.
The data centre boom is generating windfall gains for firms largely overlooked by investors, offering a bright spot in a market rattled by concerns over AI’s impact on India’s export-oriented tech sector.
“India doesn’t need to make the chip or train the model to benefit,” said Prateek Nigudkar, a fund manager at Shriram AMC. “Every data centre needs switchgear, transformers, cables, cooling systems and grid connectivity, and Indian manufacturers are already in that supply chain.”
Fibre-optic cable producers have been among the biggest beneficiaries. Strong demand for networks linking data centres has helped manufacturers secure contracts once considered out of reach.
Sterlite earlier in 2026 announced a US$1.1 billion multi-year order from a US hyperscaler – a term meaning a large-scale cloud service provider – helping drive its shares up 400 per cent in 2026.
Telecom equipment maker HFCL reported its strongest-ever April-June quarter, with revenue more than doubling on AI demand.
Founder Mahendra Nahata said he was going all out to scale up production. “We used to increase capacity probably once in three years, once in five years. Now, it’s become a daily routine,” he said.
The gains extend beyond fibre cables.
Shares in TD Power Systems have jumped 68 per cent on expectations of rising demand from AI facilities, while MTAR Technologies has benefited from demand for power units used in fuel-cell systems serving big-tech operators.
‘Big investments’
Analysts, however, warn valuations have become stretched, while growing opposition to energy-guzzling data-centre projects poses a risk.
Data Centre Watch, a tracker run by AI intelligence firm 10a Labs, says at least 75 US projects worth some US$130 billion were delayed or blocked in the first quarter of 2026.
Indian executives acknowledge the risks could hurt near-term sentiment, but argue that domestic demand would offset any slowdown abroad.
India hosts nearly a fifth of the world’s data, but accounts for less than 5 per cent of global data-centre capacity – leaving much room for growth.
An AFP review of funding announcements shows US hyperscalers have committed some US$57 billion in new Indian capacity over the past year, while conglomerates Adani and Reliance have pledged US$100 billion towards digital and infrastructure projects.
Unlike in parts of the US and Europe, data centre development in India has faced limited resistance so far.
“Opposition is probably in a very nascent stage,” said Sharad Agarwal, chief executive of data centre operator Sify Infinit Spaces. He added that operators had adopted technologies such as closed-loop water cooling systems to reduce pressure on local resources.
Sify, which operates 16 data centres and has nearly a dozen more under development, is considering an IPO that would make it India’s first listed data-centre operator.
“We are talking about big investments. If I need to be a one-GW company, I need US$5 billion,” Agarwal said. A computing power capacity of one gigawatt is often referred to as “hyperscale”.
“Then only we can go and grow.” AFP
