India emerges as strategic long-term growth market amid Asia's AI and infrastructure boom: HSBC Outlook

The report highlights India's role as a key beneficiary of Asia's accelerating AI, data centre and digital infrastructure investment cycle, driven by rapid growth in cloud usage, competitive energy and labour costs, and expanding domestic demand for digital services.

HSBC notes that Asia, including India, is expected to lead global data centre capacity growth over the coming decade, with India attracting increasing interest from global hyperscalers due to policy support, improving power infrastructure and a large digital consumer base.

The report also underscores India's importance in the broader energy security and climate transition theme, highlighting renewable energy expansion, grid investments and strategic energy cooperation with global partners.

"Asia's robust renewable energy infrastructure, land availability, lower labour and electricity costs, power grid stability and more friendly regulatory environment have attracted many US hyperscalers to invest in data centres, especially in ASEAN and India," the report notes.

Rising electricity demand from AI computing and data centres is expected to further support infrastructure-led growth.

While maintaining a constructive medium-term outlook, HSBC has adopted a neutral stance on Indian equities in the near term, stating that it is awaiting clearer evidence that government reforms will translate into sustained earnings acceleration. Other Asian markets are currently preferred for tactical overweight positions.

Nevertheless, HSBC reiterated that India remains a core strategic allocation within Asia, anchored by its young population, expanding digital economy, growing domestic consumption and improving macroeconomic stability.

It says "Asia remains a key engine of growth, with China stabilising and India maintaining strong medium-term promise."

The report highlights that India's long-term investment case remains intact, particularly across digital infrastructure, energy transition and local currency fixed income, positioning the country as a key pillar of Asia's growth in a transforming global economy. (ANI)