India’s Public Cloud Spending to Reach $17.5 Billion in 2026 as AI Drives Infrastructure Demand

Gartner forecasts end-user spending on public cloud services in India will grow 28.1% to $17.5 billion in 2026, as enterprises ramp up investments in AI-ready infrastructure, application modernization, and digital transformation initiatives.

The market is expected to expand from $13.7 billion in 2025, with infrastructure and platform services emerging as the biggest beneficiaries of growing enterprise AI adoption.

“Strong enterprise demand for AI-ready cloud infrastructure is redefining cloud investment priorities in India,” said Ashish Banerjee. He added that organizations are increasingly pursuing cloud investments to support application modernization, digital sovereignty requirements, digital service delivery, and more scalable consumption-based IT models.

The forecast underscores how AI is reshaping enterprise cloud strategies, pushing organizations beyond basic cloud migration projects toward investments designed to support large-scale AI deployment and data-intensive workloads.

According to Gartner, Infrastructure-as-a-Service (IaaS) will be the fastest-growing segment of India's cloud market in 2026, rising 40% to $6.3 billion. The firm said growing demand for GPUs, high-performance computing, high-speed networking, scalable storage, and always-on AI inference capabilities is driving spending in the segment.

Platform-as-a-Service (PaaS) is expected to remain the largest cloud spending category, reaching $6.4 billion in 2026, up 25.4% from the previous year.

Gartner said enterprises are increasingly rebuilding technology foundations around AI-driven initiatives, using platform services to unify data, connect systems, accelerate software development, and support real-time digital interactions.

Arunasree Cheparthi said PaaS adoption is evolving beyond traditional cloud migration projects as organizations embrace platform-led execution models to support AI workloads at scale.

Software-as-a-Service (SaaS), while still growing, is expected to expand at a slower pace of 18.9% to $4.6 billion in 2026. Gartner attributed the moderation to the maturity of SaaS adoption among enterprises, many of which are now optimizing software licenses and redirecting incremental spending toward infrastructure and platform capabilities needed for AI initiatives.

The forecast suggests India's cloud market is entering a new phase where AI infrastructure is becoming a primary driver of spending growth.

For enterprise technology leaders, the shift reflects a broader change in cloud economics. Rather than focusing solely on cost savings or migration, organizations are increasingly evaluating cloud investments based on their ability to accelerate innovation, improve productivity, enhance customer experience, and support AI-driven business transformation.

The trend also reinforces the growing importance of cloud providers in India's AI ecosystem, as enterprises seek access to the computing capacity required to train, deploy, and operate increasingly sophisticated AI models and agentic applications.