The Gulf gamble: Could the war in the Middle East drive a data centre exodus to India?

On 1 March, Iranian drones struck three Amazon Web Services data centres in the Gulf — two in the United Arab Emirates and one in Bahrain — knocking two of the ME‑CENTRAL‑1 region’s three availability zones offline and disrupting more than 109 services. The outages affected banks and consumer platforms including Emirates NBD and First Abu Dhabi Bank, taxi platform Careem, payments companies Alaan and Hubpay, and enterprise software provider Snowflake. Within days AWS told customers to move workloads out of the region, triggering renewed discussion about whether enterprises might shift critical infrastructure to India.

Direct quote

“We continue to strongly recommend that customers with workloads running in the Middle East take action now to migrate those workloads to alternate AWS regions. Customers should enact their disaster recovery plans, recover from remote backups stored in other Regions, and update their applications to direct traffic away from the affected Regions.”

Context and details

The strikes crystallised long‑running anxieties about the physical security of hyperscale infrastructure in a geopolitically volatile neighbourhood. The Iranian Revolutionary Guard Corps claimed the Bahrain facility was targeted for an alleged role in supporting US military and intelligence operations; AWS has not confirmed that assertion. Observers note that Bahrain hosts the US Navy’s Fifth Fleet, underscoring how proximity to military assets can alter a site’s risk profile regardless of the operator’s intent.

Gulf states made heavy investments in data centre capacity between 2021 and 2024, buoyed by sovereign capital and incentives. Research and Markets valued the Middle Eastern data centre market at USD 5.57 billion in 2023 and projected it to reach USD 9.61 billion by 2029. Saudi initiatives such as the HUMAIN programme and the UAE’s AI corridor with France pushed rack densities above 100 kW and accelerated adoption of immersion and two‑phase liquid cooling. Khazna Data Centers announced a 20‑hall AI‑optimised facility in Ajman in October 2025, and Saudi data centre services regulations have been framed around Vision 2030.

• Companies disrupted by the AWS outages: Emirates NBD, First Abu Dhabi Bank, Careem, Alaan, Hubpay, Snowflake.
• Middle East market value (2023): USD 5.57 billion; projected (2029): USD 9.61 billion.

India, by contrast, has been building capacity for years and could absorb some of the spillover. As of Q2 2025 India’s IT load capacity stood at 1.4 GW, a figure analysts expect to double within two years. Since 2020 more than USD 14.63 billion has been committed to Indian data centre development, with a further USD 20–25 billion expected by 2030. Global cloud providers, including AWS, Microsoft Azure, Google Cloud and Oracle, have growing commitments to Indian regions; OpenAI has announced plans to build a 1 GW capacity data centre in India, and Tata Consultancy Services is reportedly close to additional deals with several technology giants.

“India is growing massively in terms of data centres right now … it’s underserved in capacity and infrastructure. It’s going to be a massive growth market,” said Carl Grivner, CEO of FLAG. The country’s proximity to submarine cable landing stations in Mumbai and its time‑zone position make it an attractive low‑latency alternative for Gulf workloads.

Outlook

The migration logic is clear: existing cable routes to Mumbai, sizeable investment commitments and policy moves such as a draft National Data Centre Policy proposing up to 20 years of conditional tax exemptions and 100% electricity duty exemption create compelling pull factors. But India’s grid reliability remains a significant hurdle for hyperscale operators; diesel backup at the required scale is costly, polluting and increasingly at odds with ESG goals. For now, the Gulf’s data centre ambitions face a new constraint — the physical risks of operating in or near conflict zones — while India positions itself as the nearest, practical alternative for many workloads.