India's public cloud expenditures are on a steep trajectory, projected to hit $17.5 billion in 2026, marking a 28.1% increase from $13.7 billion in 2025. This surge reflects a broader transformation in how enterprises approach cloud technology, as they prioritize infrastructure that supports artificial intelligence (AI) workloads and digital transformation efforts.
The technology research firm Gartner highlights that strong enterprise demand for AI-ready cloud infrastructure is redefining investment priorities, pushing organizations toward more advanced cloud applications. Ashish Banerjee, Senior Principal Analyst at Gartner, noted that this momentum is driven by the need for application modernization, digital sovereignty, and scalable IT models.
Growth in Key Cloud Segments
Among various cloud segments, Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) are expected to see the most rapid growth. IaaS spending alone is projected to rise by 40%, reaching $6.26 billion, while PaaS will grow by 25.4% to approximately $6.41 billion in 2026. In contrast, Software-as-a-Service (SaaS) is anticipated to grow at a more moderate rate, reaching $4.64 billion, reflecting an established adoption base as companies optimize their software licenses.
Banerjee emphasized the increasing demand for essential components like graphics processing units (GPUs), high-performance computing power, and scalable storage solutions as key drivers of cloud infrastructure investment. This trend responds directly to the growing requirements for continuous data processing and AI capabilities.
Strategic Alignment with Business Objectives
As organizations adopt AI technologies, there is a noticeable shift in how cloud strategies align with business objectives. Banerjee remarked, "Cloud adoption is becoming more tightly aligned with business goals, such as improving productivity, accelerating innovation and go-to-market speed, enhancing customer experience and strengthening business resilience." This alignment supports stronger investment momentum and enhances the overall operational framework of businesses across sectors.
Arunasree Cheparthi, also a Senior Principal Analyst at Gartner, pointed out that PaaS is likely to become the largest cloud spending category for Indian enterprises by 2026. As companies strengthen their technology foundations to support AI initiatives, PaaS growth is expected to extend beyond simple cloud migration to comprehensive platform-led execution.
Future Challenges and Considerations
Looking ahead, Gartner warns that governance of hybrid, multicloud, and AI-enabled environments will present critical challenges for enterprises. The firm predicts that by 2030, over 60% of companies will engage in intensive AI model activities using data stored across different cloud platforms, a significant increase from less than 10% today.
In the next 12-18 months, I&O leaders in India must shift from basic cloud adoption to disciplined execution. This includes focusing on AI-ready data infrastructure, enhancing governance measures, improving financial operations, and ensuring security protocols are integrated into design processes. Banerjee concluded that organizations demonstrating agility in scaling AI and digital initiatives while maintaining cost efficiency and addressing skill gaps will likely outperform their competitors.
As the demand for AI-ready cloud infrastructure continues to grow, India's cloud market is set to evolve dramatically, with enterprises increasingly aligning their technological investments to strategic business outcomes.
Quick answers
What is the projected cloud spending for India by 2026?
India's public cloud spending is projected to reach $17.5 billion by 2026.
Which cloud segments are expected to grow the fastest?
IaaS and PaaS are expected to see the fastest growth, with IaaS rising 40% and PaaS 25.4%.
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