End-user spending on public cloud services in India is projected to surge 28.1 per cent to reach $17.5 billion in 2026, up from $13.7 billion in 2025, according to a new report by global technology research and advisory firm Gartner. The sharp uptick, highlighted on 1 June 2025, is being driven by strong enterprise demand for AI-ready cloud infrastructure, which is fundamentally reshaping how organisations prioritise cloud investments across the country.

Fastest-Growing Segments

Among the major cloud service categories, Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) are forecast to be the standout performers, with projected growth rates of 40 per cent and 25.4 per cent respectively in 2026. The surge in IaaS demand is being amplified by rising enterprise requirements for GPUs, high-performance compute, high-speed networking, and scalable storage — all essential building blocks for running large-scale AI workloads.

PaaS growth, according to Gartner, is moving well beyond conventional cloud migration. Arunasree Cheparthi, Senior Principal Analyst at Gartner, noted that 'organisations are accelerating adoption of AI-driven technologies to unify data, connect systems, speed up development and enable real-time digital interactions, driving PaaS growth beyond cloud migration toward platform-led execution.'

What Is Driving the Shift

Ashish Banerjee, Senior Principal Analyst at Gartner, attributed the momentum to a broader strategic reorientation within Indian enterprises. 'Cloud adoption is becoming more tightly aligned with business goals, such as improving productivity, accelerating innovation and go-to-market speed, enhancing customer experience and strengthening business resilience,' Banerjee said. He added that 'this sharper focus on business outcomes is sustaining strong momentum in cloud investments across the country.'

The report also pointed to rising demand for application modernisation, digital sovereignty, digital service delivery, and more scalable, consumption-based IT models as key catalysts. This comes amid a broader global trend of enterprises moving away from legacy on-premise infrastructure toward cloud-native architectures capable of supporting AI at scale.

SaaS Growth Moderates as Priorities Shift

Software-as-a-Service (SaaS) is expected to record comparatively moderate growth in 2026, as enterprises rationalise existing licences and optimise usage. Incremental spending is instead being redirected toward infrastructure and platform capabilities needed to scale AI workloads — a notable shift in enterprise procurement behaviour that analysts say reflects greater spending discipline following years of rapid SaaS expansion.

Governance and Multicloud Complexity

The Gartner report flagged governance of increasingly complex hybrid, multicloud, and AI-enabled environments as a significant challenge for Indian enterprises in 2026. Looking further ahead, the report projected that over 60 per cent of enterprises will perform intensive AI model activity by 2030 in one cloud environment while leveraging their data in another — up from fewer than 10 per cent today. This cross-cloud AI execution pattern is expected to intensify demands on interoperability, data portability, and compliance frameworks.

As India's digital economy deepens, the cloud market's trajectory signals that the country is transitioning from basic cloud adoption to a more strategic, AI-first infrastructure posture — one that will test the governance and integration capabilities of enterprises and cloud providers alike.