Until the government of India introduced the production-linked incentives (PLI) scheme for IT hardware, servers, which are the building blocks of high performance computing (HPC), were mostly imported and then assembled in India. 

However, with the government’s increased focus on promoting local manufacturing through PLI schemes, the focus has shifted to developing servers locally.

“We were granted PLI on November 18 2023, and by December 31, we successfully introduced the latest generation of Intel’s 4th Generation Intel Xeon Scalable Processors tailored for HPC, data centres and generative AI. 

“We take pride in being the first company to achieve this milestone. As of February 2023, no other entity – multinational or local OEM – has managed to manufacture servers on the latest Intel generation in India,” Amrish Pipada, founder & CEO, Mega Networks told AIM.

Notably, Hewlett Packard Enterprise (HPE) recently announced that its ‘Made in India’ servers are now being deployed at large scale to serve the growing demands of Indian customers.

HPE unveiled its Make in India plan in July 2023 and committed to manufacturing approximately USD 1 billion-worth of high-volume servers in the first five years of production.

Similarly, Lenovo, earlier this year, also announced its plans to capitalise on the PLI scheme and manufacture servers locally to bolster its data centre operations. 

Made in India Servers 

However, despite the success of the PLI scheme, it is important to understand that some components of these servers are still imported from other countries. 

Pipada believes the PLI scheme marks the beginning of India‘s manufacturing venture. “Initially, we import the Printed Circuit Board (PCB) and other components, conduct local Surface-Mount Technology (SMT) assembly, and integrate software stacks developed over the past year.”

Moreover, to encourage local manufacturing of components such as PCB, the government plans to further incentivise with the PLI scheme. “While the mechanical aspect has begun locally, it will progressively expand. With time, the entire ecosystem will develop further,” Pipada said.

Altos Computing, a subsidiary of Acer, is actively engaged in local server manufacturing. Sanjay Virnave, country head and general manager at Altos Computing, shared with AIM that 50% of their servers and components are currently developed in India. As the ecosystem continues to mature, they anticipate this percentage will rise even higher.

Homegrown companies at the forefront

Besides biggies like HPE, Dell, Foxconn, Lenovo among others, the PLI scheme has been granted to a few domestic companies like VVDN, Optiemus, Padget Electronics, SOJO Manufacturing Services, Goodworth, Neolync, Syrma SGS, Panache Digilife, ITI Ltd, Netweb Technologies and MegaNet. 

MegaNet already caters to a host of public sector clients like the Bharat Sanchar Nigam Limited (BSNL), the National Remote Sensing Centre (NRSC), IITs and the Indian Railways.

“Our work with Indian Railways involves developing systems for visitor management and face recognition for their smart coaches. Their requirement was to enhance security and streamline visitor management. The problem we are solving for the railways is to provide a secure and efficient way to manage visitors and implement advanced face recognition technology for enhanced security,” Pipada said.

On the private sector side, MegaNet is serving the likes of Reliance, Tata, NTT, and YOTTA. “We are providing them tailored-made storage systems to meet their dynamic business needs. Our solutions are customised to ensure seamless storage and efficient operations,” he added.

Last year, Netweb Technologies announced its role as a manufacturing partner for the NVIDIA Grace CPU Superchip and GH200 Grace Hopper Superchip MGX server designs.

Indeed local manufacturers have an important role to play in advancing India’s manufacturing ambitions. With strong support from the government, India can manufacture each and every component of the servers, including silicon chips, locally.

Catering to AI Demand

The wider adoption of AI since the generative AI explosion has also fueled the demand for servers in India. “With the increasing adoption of AI technologies, the need for powerful, scalable, and efficient server infrastructure has grown exponentially,” Pipada said.

“What’s notable is the increasing number of users who previously weren’t utilising servers but are now doing so. This trend reflects the growing demand for digital infrastructure. Moreover, the existing physical infrastructure is also robust and supportive of this development,” Virnave said.

Interestingly, not just AI, but the data centre landscape is also growing in India and it presents a significant business opportunity for server companies.

For example, Hiranandani Group-backed Yotta has announced its AI Shakti Cloud and plans to have 32,768 NVIDIA GPUs by the end of 2025. NeevCloud, a startup with similar ambitions also plans to have a 40,000 GPU capacity by 2026. Tata Communications, too will provide GPU as a service for AI training and inferencing.

Moreover, the Indian government has also announced its plans to build a 25,000 GPU cluster to make these processors more accessible to Indian startups.