The state-run infrastructure financier expects data centres to remain a key source of demand for long-term project financing as hyperscalers and large cloud service providers expand their presence in India.
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The facilities sanctioned by Nabfid carry moratoriums of as much as five years, followed by repayment over the next 10 years, managing director Rajkiran Rai G. said in an interview to Bloomberg News.
Such projects generate “good” cash flows despite their long construction periods, Rai said, adding that Nabfid has seen good traction from hyperscalers and large cloud services providers.
The lending activity comes as companies ramp up spending on large infrastructure projects, including data centres, to support the computing capacity needed for AI and cloud services.
Global investors including EQT AB and Blackstone Inc. and companies such as Alphabet Inc. have announced large investments in India’s data centre and AI infrastructure, alongside domestic conglomerates including the Adani Group.Nabfid estimates that India’s data centres will require about Rs 1 trillion in funding through March 2031, according to a presentation by the lender.
Data centres emerge as major capex opportunity
The scale of financing required for data centres reflects the capital-intensive nature of the sector, where projects involve substantial upfront spending on land, power, cooling systems, servers and other infrastructure before generating revenue.
For lenders, however, the long-term cash flows associated with established data centre facilities can make the projects suitable for infrastructure financing.
Rai said the lender was seeing strong demand from hyperscalers, signalling continued investment by large cloud and technology companies in India’s digital infrastructure.
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The financing push comes as India seeks to expand its domestic computing capacity to support growing demand for cloud services and AI applications.
The government has also been seeking to strengthen the country’s position in the global AI ecosystem, while companies are committing capital to data centres and related infrastructure.
Nabfid’s own estimate points to a significant funding requirement over the next five years, with around Rs 1 trillion needed for data centre projects through March 2031.
Nabfid plans Rs 1 trillion fundraising
The lender is also looking to diversify its sources of borrowing as it scales up infrastructure financing.
Nabfid plans to raise about Rs 1 trillion during the financial year ending March, with roughly 40% of the borrowing expected to come from overseas sources by the end of December, Rai said.
The lender has already raised close to $1 billion through offshore loans under a concessional window offered by the Reserve Bank of India until December 31.
It has also mandated foreign banks to mobilise a 10-year dollar bond of a similar size through the window by the end of September, Rai said.
The planned offshore borrowing will add to Nabfid’s funding pool as it expands lending to large infrastructure projects, including data centres.
The lender’s financing strategy comes at a time when India’s infrastructure investment cycle is broadening beyond traditional sectors such as roads, power and transport to newer areas linked to the digital economy.
Data centres are emerging as one of those capital-intensive sectors, with demand being driven by cloud computing, digital services and the rapid expansion of AI workloads.
For Nabfid, the sector provides an opportunity to deploy long-term infrastructure finance into projects that require significant upfront investment but can generate recurring cash flows once operational.
With the lender estimating a Rs 1 trillion funding requirement for India’s data centres through March 2031, the sector is likely to remain a significant part of the country’s next phase of infrastructure investment.