India’s startup ecosystem is entering a phase of strategic scaling in which access to affordable and locally controlled computing infrastructure will play a decisive role, particularly as artificial intelligence becomes central to new business models, according to a technology entrepreneur.
Narendra Sen, founder and CEO of data centre and cloud services firms RackBank and NeevCloud, said startups are moving beyond early experimentation towards building products that can scale sustainably and compete globally.
“India’s startup ecosystem is pivoting from a phase of rapid experimentation to one of strategic scaling and sovereignty,” Sen said, arguing that reliance on basic cloud access is no longer sufficient as AI adoption accelerates.
Artificial intelligence has emerged as a key focus for Indian startups across sectors, but high computing costs and dependence on overseas infrastructure remain barriers for many early-stage companies. Sen said startups increasingly require high-performance, AI-ready systems that are both affordable and locally available.
He said the concentration of advanced computing infrastructure in major cities risks limiting innovation elsewhere, particularly as a growing share of new startups emerge from Tier-2 and Tier-3 cities.
“Building robust, GPU-dense infrastructure in Tier-2 cities isn’t just about cost efficiency,” Sen said. “It‘s about enabling founders to build, train, and deploy locally while competing globally.”
Industry executives and policymakers have highlighted the need to decentralise digital infrastructure as India seeks to broaden participation in the technology economy and reduce regional imbalances. Lower data latency and access to computing resources closer to users are seen as increasingly important for AI-driven applications.
Sen said that without wider access to advanced infrastructure, startups could find themselves constrained by the cost of computing power rather than the quality of their ideas. “The next unicorn shouldn’t be limited by the cost of compute or data latency,” he said.
The views also echo with a broader debate within the country’s technology sector over digital sovereignty and the risks of over-reliance on foreign cloud providers. As AI systems become more embedded in core business operations, control over data and computing resources is gaining prominence alongside concerns around cost, resilience and regulatory alignment.
“The future belongs to those who control their compute,” Sen said, adding that investment in scalable and sovereign digital infrastructure would determine whether India remains a consumer of AI technologies or emerges as a global leader in their development.
For startups, the shift suggests that long-term competitiveness may increasingly depend not just on capital and talent, but on access to reliable, high-performance infrastructure closer to home.
