Data centre capacity in India: Is it going to increase in the coming time?

We are in the midst of a dramatic change in the country towards being a digital-first economy, as demonstrated by the very swift uptake of cloud services, artificial intelligence (AI) and data-driven governance. The change is centred on the data centre ecosystem which offers the essential infrastructure necessary for storing, processing and transmitting data at scale.

Why do data centres matter in a digital economy?

Data centres are the backbone of any digital infrastructure. From online transactions to cloud based applications, streaming services to artificial intelligence (AI) models, all of them are dependent on reliable and secure server infrastructure. In a country like India, with growing internet penetration and scalable digital public infrastructure, data centres become a critical enabler of economic participation and service delivery.

From banking and financial services to education, healthcare, e-commerce, businesses are dependent on reliable access to computing power and storage. Higher consumption of data requires a massive data centre capacity, demanding operators to conduct data centre capacity planning with maturity to ensure high availability, scalability and cost optimisation. As India aims to become a global technology and services destination, the need for reliable data centre infrastructure is critical.

What is a data centre?

A data centre is a built environment that houses servers, storage and networking hardware for the management and processing of digital information for organisations and/or governments. These facilities are built to run 24/7, with continuous power, state-of-the-art cooling, fire suppression and rigorous physical and cyber security controls.

A data centre is a digital warehouse. It stores a lot of information, but the requirement is also that information can be pulled fast and reliably. Data centres are built for high-density workloads, including artificial intelligence and machine learning (AI-ML) workloads that demand large server storage capacity and power consumption.

Current data centre capacity in India

India’s operational data centre capacity by mid-2024 was roughly 917 megawatts, while by late 2025 was near 1.5 gigawatts. This shows that new data centres all around the country’s large cities are being brought online. Occupancy is high (over 95% in most mature markets) which points to a strong underlying demand.

High utilisation underlines the attractiveness of the Indian market and the need for any further capacity. There is pressure from developers and operators to expand while maintaining a high level of reliability and energy efficiency. With this capacity constraint in place, data centre capacity planning is relevant for the longer term, especially for hyperscale cloud providers with multi-year expansion plans.

Major data centre hubs in India

India’s data centre market is highly concentrated, with more than 70% of installed capacity found in an assortment of metropolitan hubs. This concentration is driven by the demand for excellent power infrastructure, fibre connectivity, access to enterprise customers and skilled work force.

Mumbai, Navi Mumbai, Hyderabad, Bengaluru and Chennai are the major data centre hubs in India.

Key drivers of data centre growth

There are multiple structural forces that are fueling the explosive growth in data centre capacity in India. The widespread use of smartphones, digital payments, and enterprise adoption of cloud platforms have all been contributing to exponential data growth. This, in turn, has increased the demand for robust, scalable infrastructure.

Artificial intelligence is a major contributor. AI workloads are demanding power-intensive computing requirements, need cutting-edge cooling solutions, and require significantly larger server storage capacity than non-AI workloads. This has led to the design of new facilities to support power-intensive deployments and is currently changing the way data centre capacity is planned across the industry.

Investment opportunities and capital deployment

The rise in data centre capacity is a major capital investment opportunity. The market is projected to invest as much as $30 billion in total capital expenditure by 2030 across real estate development, power systems and high-end equipment. The real estate component could take as much as $6 billion, while power infrastructure could take as much as $10 billion.

Publicly-listed conglomerates and engineering companies such as Reliance Industries Limited and Larsen & Toubro Limited stand to benefit indirectly from construction, energy and digital services subsidiaries. While the developments have attracted attention in the market, it is suggested that they should be seen as thematic trends rather than specific investment recommendations.

Conclusion

India’s data centre industry is at a critical juncture. Strong demand, conducive policy and technological progress are propelling a steady increase in data centre capacity. While challenges such as power, land and sustainability remain, the overall trend is still strongly positive.

As the industry observes each step closely, the growing data centre ecosystem will be critical in creating India’s digital destiny and its participation in global technology value chains.