UAE signs pact with India for data centres during Modi's visit

The two countries will also focus on promoting investment in digital infrastructure, AI and supporting the development of a supercomputer cluster in India

UAE President Sheikh Mohamed and India's Prime Minister Narendra Modi during their meeting in Abu Dhabi. AFP

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India and the UAE have signed a pact to expand bilateral investment co-operation in digital infrastructure, with a focus on developing data centre projects in Asia’s third-largest economy.

The two countries signed the preliminary agreement in the presence of UAE’s President Sheikh Mohamed and Indian Prime Minister Narendra Modi, who is on a two-day visit to the Emirates.

As part of the agreement, the two countries will jointly explore, assess and evaluate the technical and investment potential of developing data centre projects in India with an initial capacity of up to 2 gigawatts, the UAE’s Ministry of Investment said in a statement on Wednesday.

They will also focus on promoting investment in digital infrastructure and artificial intelligence, as well as supporting the development of a supercomputer cluster in India with a capacity of 8 exaflops (a measure of performance for a supercomputer) for use by government, public, private sectors and academia.

The agreement is “built on the strong historical relationship between our two countries, is reinforced by a shared vision to leverage technology for driving innovation, economic growth and societal development”, Mohamed Alsuwaidi, UAE’s Minister of Investment, said.

Data consumption has increased as remote work trends, largely prompted by the Covid-19 pandemic, have fuelled the adoption of cloud services and their associated data centres.

The data centre market size in India is expected to grow about 11 per cent annually between 2024 and 2032 to reach $11.6 billion, amid the rapid digital transformation of industries and the shift towards cloud-based solutions, according to the International Market Analysis Research and Consulting Group.

India is ranked among the top 15 countries for data centre capacity, with a network of 151 centres spread across its regions. The country’s internet economy is expected to reach $1 trillion by 2030, from $175 billion in 2022, according to the UAE’s Ministry of Investment.

“This growth is largely driven by the widespread preference for digital interactions among consumers and merchants in the country, which has a population exceeding one billion,” the ministry said.

“The trajectory is further accelerated by data localisation policies mandating the domestic storage of local data, as well as 'Digital India', an initiative launched by the government of India to ensure its services are electronically accessible to citizens.”

Separately, during Mr Modi's visit, AD Ports Group, the operator of industrial cities and free zones in Abu Dhabi, said on Wednesday that it had signed initial agreements with Gujarat Maritime Board and Rites, a multidisciplinary transport and infrastructure company, to boost trade and infrastructure development in India.

The agreement with Gujarat Maritime Board will include building new ports and the expansion and modernisation of existing port units, a statement from AD Ports said. The deal with Rites, a public sector company, is focused on exploring opportunities for port development as well as logistic parks, economic and free trade zones and rail connectivity projects.

India and the UAE signed additional deals during the visit, including a framework agreement on the India-Middle East-Europe economic corridor, a preliminary agreement on co-operation in electricity interconnection and trade, and an agreement on interlinking their instant payment platforms – UPI in India and Aani in the UAE for cross-border transactions between the two countries, according to a statement from the Indian foreign ministry.

The two countries also signed a pact to link India's payment card RuPay with Jaywan in the UAE.

The new agreements come as India and the UAE continue to strengthen trade and investment ties.

India is the second largest trading partner of the UAE, while the Emirates has been the third largest trading partner for the Asian country since 2019.

They also signed a comprehensive economic partnership agreement in 2022 to remove most trade barriers and boost non-oil trade.

As part of the objectives of the Cepa, the UAE and India hope to reach $100 billion in bilateral trade by 2030, from $85 billion in 2022.