Industry Odisha Bureau, Sep 29: AI data centres are soaking up global memory supply. That is pushing up India’s tech import bill and consumer device prices. The hit to overall inflation remains small.
The AI race is being fought in distant data centres. Its costs are now reaching Indian shoppers. AI systems need vast amounts of memory to run. That appetite is squeezing global memory supply for everyday gadgets. India feels it twice: through its tech import bill and store prices.
Memory runs short
AI data centres rely on high-bandwidth memory (HBM) and server-grade DRAM. Hyperscalers are investing billions in such facilities worldwide. Demand for memory chips has outrun supply. Chipmakers have tilted capacity towards these higher-value products. That has tightened supply of conventional memory for phones and laptops.
DRAM is the main working memory in laptops, phones and smart TVs. Its prices rose over 400% between August 2025 and March 2026. Prices have eased since, but remain far above last year. In August, DDR5 cost 4.7 times its year-ago level. DDR4 cost about three times as much.
The import bill swells
India assembles and buys vast electronics but relies heavily on imported inputs. So global chip prices show up first in its tech import bill. The telling sign is value outpacing volume.
Until January 2026, both grew roughly in step for memory chip imports. In February, import value rose 110% year on year, but volume only 18%. By June, value had surged 314%, against 60% volume growth.
Anubhuti Sahay, India economics research head at Standard Chartered Bank, offers two explanations. The gap could reflect higher prices or a shift to higher-end chips. Standard Chartered believes chip price increases likely explain most of it. Memory chips make up 12% of India’s electronic imports.
A deficit bigger than gold’s
Standard Chartered also tracks trade in AI-enabling products. These include advanced semiconductors, processors, memory chips and networking hardware. The 12-month rolling deficit hit 2.0% of GDP in July 2026. A year earlier, it was 1.5%. That now edges past India’s gold trade deficit of 1.9%.
Shoppers feel the pinch
Consumer devices are next in line. Pen drive and external hard disk inflation hit 16.8% in August. It was just 3.9% in January. Pen drives use NAND flash memory, now squeezed by shifting capacity. Demand for high-capacity storage is also outpacing supply, lifting hard-disk prices.
Smartphones have turned too. Handset prices fell 2.3% year on year in January. By August, handset inflation had crossed 3.5%, the highest since at least January. Phones use low-power LPDDR memory, which has also grown costlier.
Big for buyers, small for CPI
Yet the wider economy barely notices. The information and communication segment carries just 3.61% weight in the CPI basket. It also covers mobile tariffs and streaming costs. It added only 0.12 percentage points to the latest 4.8% inflation reading. That figure also includes a sharp rise in mobile tariffs. A steep rise on a small slice of spending moves the total little.
Gaura Sengupta, chief economist at IDFC FIRST Bank, expects the pressure to stay gradual. She sees it concentrated among urban, upper-income buyers of high-end devices. Nearly 70% of Indians live in rural areas, she noted.
AI’s hidden hardware bill
AI memory demand is reshaping costs far beyond the data centre. India pays part of that bill through imported components. Gadget buyers may feel a real pinch. The national inflation picture, however, stays largely untouched for now.
