New Delhi, Sep 2026 : Australia’s rapidly expanding data centre capacity and India’s surging demand for artificial intelligence (AI) infrastructure could create a natural area of complementarity between the two countries, according to an analysis published by the Lowy Institute.
The article argues that Australia is developing data centre capacity at a pace that could exceed domestic demand, while India’s AI expansion is advancing rapidly enough to outstrip its own available infrastructure. This divergence, it says, presents an opportunity for Canberra and New Delhi to develop a deeper partnership in AI, computing infrastructure and related technologies.
Australia’s National AI Plan, released in December 2025, positions the country as a potential Indo-Pacific hub for trusted digital infrastructure. The strategy points to more than A$100 billion in forecast investment in data centres, supported by Australia’s abundant renewable energy resources.
According to the analysis, Australia is seeking to establish itself as a regional AI hub by combining its land availability, energy resources and expanding data centre industry with growing regional demand. India, with its rapidly increasing requirement for AI computing capacity, could provide a significant source of long-term demand.
The article noted that India and Japan had issued a joint statement on AI shortly before Prime Minister Narendra Modi’s visit to Melbourne in July 2026. The agreement covered areas including data centres, computing capacity and semiconductors, and the Lowy Institute suggested that a similar framework could be developed between Australia and India.
“Australia still provides a better case – with surplus land, renewable energy, and a data centre sector still drawing about 2 per cent of national electricity,” the article said.
It noted that Australian energy ministers had agreed that new data centres should fund additional renewable generation to offset their electricity consumption. According to the analysis, securing investment in new renewable generation would require predictable, long-term demand, which could potentially be provided through substantial commitments from Indian companies or institutions.
The analysis also described Australia as a potentially more reliable AI partner for India than the United States, particularly as both countries seek greater stability in critical technology and supply chains.
Modi’s meeting with Australian Prime Minister Anthony Albanese in July 2026 had resulted in the launch of the Australia-India Partnership on Cyber, Critical Technologies and Supply Chains. The partnership is structured around five pillars and is overseen at the deputy national security adviser level.
However, the Lowy Institute analysis argued that AI currently features as only one of several technologies covered by the broader framework and that a dedicated mechanism could help deliver more tangible outcomes. It pointed to the India-Japan arrangement as an example of a more focused approach.
One of the most practical early initiatives, the article suggested, would be the development of common benchmarks for AI models capable of working effectively across Indian languages.
AI systems are still evaluated predominantly in English, meaning that a model that performs well in English may not necessarily deliver comparable results in languages such as Hindi, Tamil or Bengali. India, with its extensive linguistic diversity and technology ecosystem, could take the lead in developing standardised test suites for multilingual AI models.
The article said shared benchmarks for multilingual and Indic-language AI would be technically feasible and could serve the interests of both governments, while commercial developers may have limited incentives to finance such foundational testing infrastructure themselves.
It proposed establishing an annual India-Australia AI dialogue as a standalone mechanism under the existing critical technology partnership. Such a forum could initially focus on developing language benchmarks before moving towards more complex negotiations over access to computing infrastructure.
According to the analysis, the combination of Australian infrastructure and renewable energy resources with India’s expanding AI demand and technological capabilities could provide both countries with a practical foundation for a deeper strategic partnership.
