L&T set to ink hyperscaler deal, expand DC footprint

Indian engineering giant  Larsen & Toubro (L&T) is close to inking an equity partnership with a global hyperscaler, as the engineering and infrastructure major sharpens its push into AI-led digital services.

Alongside the proposed partnership, the Mumbai-headquartered group is planning to scale up its data centre capacity to around 200 MW over the next five years, from the current 32 MW, underscoring its ambitions in digital infrastructure.

The potential tie-up was flagged by Chairman and Managing Director S N Subrahmanyan at Axis Capital’s annual India Conference in Mumbai this week. While he did not disclose the identity of the hyperscaler or financial details of the transaction, people familiar with the matter said an announcement is expected soon.

The partnership forms a key pillar of L&T’s broader AI strategy. The group has institutionalised AI adoption across businesses through an AI Council chaired by the CEO, embedding automation and analytics into core operations.

The efforts are beginning to yield measurable gains. Robotic welding deployments have cut cycle times by over 20%, while AI applications are being used for microfinance credit assessments through drone and image-based analytics, as well as for contract scrutiny and design reviews.
L&T’s digital ambitions are also supported by its semiconductor foray through L&T Semiconductor Technologies, a fabless chip design arm that now houses a 500-strong global design team with international offices and active customer engagements.

These initiatives align with the conglomerate’s ongoing portfolio rebalancing, with high-margin technology-led businesses — including semiconductors, IT services and financial services — expected to outpace growth in its traditional engineering, procurement and construction (EPC) segments.

During its third-quarter earnings call, L&T disclosed a planned capital expenditure of ₹1,000 crore for its data centre business. Of its total 32 MW capacity, 14 MW is currently operational, while the remaining 18 MW is slated for commissioning by the end of the current fiscal year.
On the semiconductor business, company executives noted that investments remain focused on developing design-led chips, adding that discussions are underway with multiple prospective customers.