As global investors rush to fund the infrastructure driving the artificial intelligence boom, Canada Pension Plan Investment Board (CPP Investments) has committed up to ₹70 billion (approximately $741 million) to CtrlS, an Indian data center operator. This move reflects a bet on India’s expanding role in the worldwide development of cloud and AI infrastructure.

Under the partnership announced Wednesday, CPP Investments will invest ₹40 billion (around $423 million) to acquire an 8.2% stake in CtrlS. Additionally, it will commit up to ₹30 billion (about $317 million) to a joint venture aimed at developing hyperscale data center campuses across India. According to a joint statement, CPP Investments will hold a 48% stake in the venture, while CtrlS will retain the remaining 52%.

Founded in 2007, CtrlS operates more than 15 data centers across India. The Hyderabad-based company has been expanding its footprint to meet growing demand from cloud providers, enterprises, and AI workloads. India has emerged as a key destination for data center and AI investments, as global tech companies and investors ramp up spending to satisfy surging computing needs. In recent months, firms like Amazon, Google, Microsoft, OpenAI, and Uber have announced investments in the country, while operators are rapidly scaling capacity amid a broader international race to build AI infrastructure.

“As one of the world’s fastest-growing digital markets, India represents an important pillar of our global data center strategy,” said Max Biagosch, CPP Investments’ global head of real assets, in a statement. CPP Investments, Canada’s largest pension fund, has been active in India since 2009 and held net assets of about $20 billion in the country as of March 31, making it one of the largest foreign institutional investors there.

This investment builds on CPP Investments’ broader push into digital infrastructure. The pension fund noted it has been investing in the data center sector since 2017 and has built a portfolio of assets and joint ventures across major global markets. Sridhar Pinnapureddy, founder and CEO of CtrlS, said the partnership will help his company expand capacity and build infrastructure specifically designed for AI workloads.

The CPP-CtrlS deal is the latest in a series of investments targeting India’s data center sector. Earlier this month, Blackstone-backed AirTrunk announced plans to invest $30 billion to build five gigawatts of data center capacity in India by 2030. Meanwhile, Meta partnered with Reliance Industries last week on a 168-megawatt AI-enabled data center in the western state of Gujarat.

New Delhi has positioned India as a global hub for digital infrastructure through policy measures, including tax exemptions for foreign cloud providers on services sold overseas through 2047, provided those workloads run from data centers located in the country. Indian conglomerates have also accelerated expansion plans to seize the opportunity. Adani Group and Tata Consultancy Services are among companies that have unveiled major data center projects aimed at supporting AI and cloud workloads.

In 2023, CtrlS announced plans to invest $2 billion over six years to expand its data center footprint across India. However, India’s growing role in AI infrastructure has not yet been matched by similar progress in developing frontier AI models. While the country has a handful of startups building indigenous AI models, including Sarvam, much of the underlying AI technology used by Indian companies still comes from U.S. firms.

The rapid buildout of data centers is also expected to increase pressure on electricity and water resources, highlighting some of the challenges that could accompany India’s ambitions to become a major AI infrastructure hub.