End-user spending on public cloud services in India is projected to increase by 28.1% to reach $17.5 billion in 2026, up from $13.7 billion in 2025, as per a report by Gartner. The demand for AI-ready cloud infrastructure among enterprises is a key driver reshaping cloud investment priorities. This surge is attributed to the growing need for application modernization, digital sovereignty, and scalable IT models.
The report anticipates that infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) will experience the most rapid growth at 40% and 25.4%, respectively, in the coming year. Cloud adoption is now closely linked with business objectives such as enhancing productivity, fostering innovation, and improving customer experience. Organizations are increasingly focusing on advanced and strategic cloud use cases.
The emphasis on business outcomes is propelling substantial momentum in cloud investments across India. The rising demand for GPUs, high-performance compute, networking, and storage is driving higher spending in the IaaS segment. Conversely, Software-as-a-Service (SaaS) growth is expected to be more restrained as companies optimize licenses and shift spending towards infrastructure and platform capabilities for scaling AI workloads.
Enterprises are hastening the adoption of AI-driven technologies to streamline data, accelerate development, and facilitate real-time digital interactions, leading to PaaS growth beyond mere cloud migration. However, managing complex hybrid, multicloud, and AI-enabled environments poses a significant cloud challenge for enterprises in 2026. The report highlights that by 2030, over 60% of enterprises will engage in intensive AI model activities in one cloud while leveraging data in another, a significant increase from the current less than 10%.
