GPU and Connected Data Centre Equipment Financing: An Indian Legal Perspective

GPU and Connected Data Centre Equipment Financing: An Indian Legal Perspective

As the demand for AI compute grows, financing the infrastructure behind it is emerging as a legal and commercial question. Nvidia’s recent move to establish compute financing platforms, alongside a proposed regulatory framework in India, signals an emerging financing model. India’s International Financial Services Centres Authority (‘IFSCA’) has proposed recognising the leasing of Graphics Processing Units (‘GPUs’) and connected data centre equipment as a financial product. GPUs are specialised processors well suited to performing the intensive processing required for AI and other advanced technologies. The IFSCA is a statutory authority that regulates (a) financial products and services offered in, and (b) financial institutions operating in, India’s International Financial Centres. Currently, India only has one recognized International Financial Centre, i.e., the Gujarat International Finance Tec-City (commonly known as ‘GIFT City’). This post considers the legal and commercial issues that could shape the development of the leasing of GPUs and connected data centre equipment as a financial product.

Nvidia's Proposed Compute Platform

In August 2026, Nvidia announced partnerships with six global financial institutions to establish compute financing platforms at global scale. Nvidia stated that the platforms will ‘broaden access to AI infrastructure’ and help customers access scarce compute at scale. The financial institutions will independently underwrite the infrastructure, with the partnerships subject to final agreements. 

Nvidia describes its compute as an ‘investable asset’, pointing to its low token costs, revenue potential and long useful life. It also highlights the wider ecosystem built around its CUDA® platform, which provides the software and tools that allow developers and businesses to build and run AI applications on Nvidia's hardware.

The platform seeks to enable use of its GPUs by businesses without requiring them to bear the entire upfront cost.

IFSCA's Consultation Paper and Model for Other Industries

The IFSCA has sought comments from the public on whether the leasing of GPU and connected data centre equipment should be declared a ‘financial product’, dealt with by entities regulated by the IFSCA. In addition to GPUs, the consultation covers ‘other data centre equipment’ like AI accelerators, as well as servers, storage, networking, interconnect, power and thermal management equipment used with such systems. The IFSCA statute enables the Indian government to determine new financial products to be regulated by the IFSCA. For example, the Indian government previously declared aircrafts and ships as financial products to enable their leasing in GIFT City. Leasing arrangements may be denominated in any freely convertible currency, which may offer participants more flexibility for their deals. 

Once finalized, the proposed framework could enable financial institutions in GIFT City to participate in financing such equipment. The consultation paper identifies leasing as a commercially viable medium to address issues relating to the high capital cost of AI infrastructure and the rapid pace at which GPU technology and trade are evolving. The proposed framework seeks to allow businesses to access computing capacity without having to make a significant upfront investment. The consultation paper further considers that the lessor may assume some of the risk associated with compute infrastructure, such as obsolescence and residual value; and the lessor’s expertise may be leveraged to ensure that the product is correctly placed, priced, managed, and remarketed. That said, we will have to await the finalization of such framework by the IFSCA.

Proposed Set-up

The proposed structure would involve a lessor established in GIFT City providing an operating or financial lease of the equipment to a customer. The lessor may be a consortium or an individual organization. Depending on the structure adopted, the GPU manufacturer or supplier could participate in the arrangement or remain outside the financing structure. The lessor will have to comply with GIFT City’s prudential and other regulatory requirements. 

The contractual arrangements between the supplier, lessor and customer (lessee) would therefore be important. They would need to address financial risk, procurement, delivery, payment obligations, maintenance, warranties, and the allocation of risks associated with the equipment.

Legal and Regulatory Challenges

Export Controls and Geopolitical Considerations

With the supply of GPUs come export control requirements that certain countries, particularly the U.S. and China, have imposed on manufacturers, providers and users of chips and related equipment exported from their respective countries. These requirements may include restrictions on the export or use of particular GPUs and requirements to obtain relevant licences and permissions, which could trickle down to the end-user. Having a trusted supplier may make compliance easier, but the burden of compliance may ultimately be shared between the different stakeholders in the ecosystem, which will also have to be agreed in the underlying contracts. The possibility of additional regulatory controls or embargoes also remains relevant and could have a significant impact on the structure.

Structuring for Technological Changes and Upgrades

One issue that may be unique to GPU financing is the rapidly changing nature of GPU technology and technical specifications. The commercial viability of a particular financing structure could be affected by the speed at which equipment becomes obsolete. Lawyers will therefore need to weave in contractual safeguards around the revenue model, including conditions relating to upgrades, service levels, buy-out options, and potentially subscription-based models.

Insolvency and Repossession

GPU values may decline based on tech upgrades and changes. In case the underlying asset (e.g., a GPU) becomes obsolete, and the lessee subsequently fails on their repayment obligation, the lessors or lenders may find challenges in recovering their financial exposure. A way to address this would be to bind the supplier contractually to share the losses. The relationship and the contract between the lessee and supplier must address such scenarios. For example, Nvidia announced that it may provide a “residual-value-support mechanism” for up to 25% based on the project it is supporting. According to Nvidia’s press release, the final agreements between Nvidia and the select financial institutions and other capital providers are yet to be executed.

Conclusion

India’s proposal to open GIFT City for leasing GPU and connected data centre equipment is an enabling move that could attract financial institutions and other stakeholders to establish financing businesses for such equipment. However, the commercial success of such a framework will depend not only on the availability of financing, but also on demand for the underlying equipment and the pace of technological change. 

It will therefore be interesting to see whether India and the IFSC are considered suitable destinations for such financing from a demand and commercial standpoint, and whether demand for GPUs will remain sufficiently constant to support the financing structures being contemplated. At the same time, managing the complex contractual, technological and regulatory requirements associated with such structures will be a key challenge.

Aditya Sharma is a lawyer based in Delhi, India.