Microsoft is to be the first multinational to set up a data center for cloud services in India, according to a report in the Indian publication Economic Times.

To date, the country has been hampered by unpredictable power supplies, patchy internet connectivity, limited bandwidth and unreliable optical fiber connectivity between different parts of the country, which have made even Google and Amazon loathe to create a local presence.

However, mass cloud adoption could change that.

Gartner research director Naveen Mishra said over the last couple of years, the groundwork has been done and Indian customers understand the nuances of public cloud.

According to Gartner changes in political and economic scenarios have triggered positive sentiment for making investments in India.

"Everyone expects that enterprises will invest more into expansion and they will have to leverage IT for growth," Mishra said.

Recent guidelines issued by the Reserve Bank of India (RBI) which prohibit the storing of local customer data outside of India, mean the need for a local presence has become almost obligatory for the adoption of cloud services, especially in the financial services industry, the report said.

According to Microsoft, cloud services are its fastest growing market, though they currently constitute around 5% of the company’s overall revenue.

Microsoft’s corporate VP and CIO Jim Dubois, that could soon change, if current trends continue.

"Cloud services are growing double, even triple digit every month, not every year," said Dubois said.

Gartner estimates that the public cloud services market in India will grow from US$423m in 2013 to US$1.3bn in 2017, which makes India the fastest growing cloud market in the world.

A local presence could help Microsoft sell its cloud offerings to several industry sectors, the most likely early adopters being banking, financial services and the insurance sector.

"We are considering a data center in India. There are a lot of different companies that are looking at cloud right now, in anticipation that Microsoft will somehow figure out how to get that work," Dubois said.

Currently Microsoft offers cloud computing services to Indian customers through its global data centers.

“We hear that Amazon is considering setting up a data center in India but nothing has happened yet," Mishra said.