Summary:
India's AI market is projected to reach ₹11.7 trillion by 2032, driving a sharp expansion in the country's data centre industry. Operational data centre capacity is expected to grow more than fivefold by 2030, supported by rising AI adoption, digital infrastructure demand and renewable energy investments. The trend is likely to create long-term opportunities for companies in data centres, power, renewables and digital infrastructure.
The Indian artificial intelligence (AI) market size is expected to hit ₹11.7 trillion by 2032 and fuel a surge in high performance computing infrastructure, thus providing great investment prospects within the data centre industry.
According to the report by Wood Mackenzie, entitled “India’s Data Centre Landscape: Powering the Digital Economy”, the operational data centre capacity in India is projected to multiply by more than five times from 2.2 GW in 2025 to 12 GW in 2030, with the compound annual growth rate (CAGR) of around 40%.
The dedicated AI data centre capacity is forecast to grow by almost 24 times between 2025 and 2030 – from 275 MW in 2025 to 6,546 MW in 2030.
Data Centres Become a Structural Growth Opportunity
The fast adoption of AI technologies is making India’s data centres an attractive long-term investment destination.
This growth is being driven by India’s digital economy worth ₹32 trillion that accounted for almost 12% of the nation’s GDP in 2025.
India has over 1.03 billion active internet users and processes almost 22 billion monthly transactions through UPI payment mode, thus creating huge demand for digital infrastructure.
AI expansion, the development of the hyperscale industry, along with government initiatives, is going to help India become one of the key players in the data centre market of Asia Pacific region.
Previously, availability of land and investment were the major driving factors for developers while choosing new projects; but today, availability of power has become the key deciding factor.
AI Data Centres to Increase Power Demand
The growth of data centres would lead to an escalation in electricity usage. The power use in data centres is likely to grow twentyfold from 10 TWh in 2025 to reach 7% of the total electricity demand in India in 2040.
Data centres used for AI services are forecasted to contribute 26.3 GW to the country’s additional electricity demand till 2031-32, according to the Ministry of Power. The said additional demand for electricity is set to be supplied through renewable energy sources.
India’s peak demand for electricity is now 270.8 GW and expected to grow to 272 GW in this year and 300 GW in the coming fiscal year.
List of Power Sector Stocks in India
Renewable Power and Water Management Become Key Challenges
In view of electricity becoming the most significant bottleneck for further growth of data centers, captive electricity generation and renewable power purchase agreement (PPA) are becoming more relevant options.
Those states that have better open access policies and lower transmission tariffs are bound to get more investments.
Ensuring round-the-clock power supply will be helpful in offering an edge to the companies over the period of time.
The problem of water supply is also posing itself in view of increasing workloads and increased demand for cooling capacity.
The water stressed states like Tamil Nadu and Karnataka will face further challenges in this regard.
Maharashtra, Tamil Nadu Lead Data Centre Expansion
As of now, Maharashtra and Tamil Nadu have about 65% share of India's IT load. But the next round of investments will see penetration in other states like Andhra Pradesh, Telangana, Uttar Pradesh, and Karnataka.
Many leading cloud-based companies from across the world along with local ones are expanding operations in India, and AdaniConnex has announced its 2.6 GW data centre project pipeline.
Stock Market Impact: Data Centre and Power Stocks in Focus
There is growth potential over the long term for firms operating in data centers, renewables, power transmission, cooling technologies and digital infrastructure.
Nevertheless, there were no signs of any stock-related reaction to this news immediately. It can be expected that investors will keep an eye on companies exposed to data centers, power production, renewables and infrastructure as demand grows over time because of artificial intelligence.
