The rapid expansion of data centers in India could have significant broader macroeconomic effects, Shilan Shah of Capital Economics writes in a note. Much of the discourse regarding the impact of AI on India's economy has focused on disruption to the services sector, but AI still requires a large amount of physical infrastructure investments, Shah says. While announced data-center investments over 2026-2030 is equivalent to only 0.5% of annual GDP, the impact could be much larger if it proves to be a catalyst for policymakers to upgrade India's power system and water sources, Shah adds. Demand for domestic capabilities in electronics and precision engineering will also help India move up the manufacturing value chain, Shah says. (kimberley.kao@wsj.com)