India's data centre industry reached a significant milestone in 2025, with capacity expanding more than threefold from approximately 0.5 gigawatt (GW) in 2020 to an estimated 1.6 GW. This remarkable growth trajectory reflects the country's rapidly evolving digital infrastructure landscape, driven by a nearly 30-fold surge in data consumption since 2017 and close to 900 million internet users. The increasing adoption of artificial intelligence applications has further accelerated demand for data centre capacity.

Major Investment Announcements Drive Industry Growth

The year 2025 marked a watershed moment with unprecedented investment commitments totaling $63 billion across the sector. Excluding Reliance Industries' contributions, the total announcements reached $43 billion, according to Bernstein research.

Hyperscalers demonstrated strong demand by leasing nearly 98 MW in the first half of 2025 alone, while maintaining robust occupancy rates of approximately 97%. This sustained demand reflects the sector's healthy fundamentals and growing market confidence.

Mumbai Maintains Market Leadership

Mumbai continued its dominance in India's data centre landscape, accounting for half of the country's total capacity. The city's strategic advantage stems from its undersea cable connectivity, making it a preferred location for international and domestic operators seeking reliable global connectivity infrastructure.

Power Infrastructure Emerges as Key Growth Driver

India's renewable energy expansion has created a significant competitive advantage for the data centre sector. The country achieved a record addition of 30 GW of renewable energy capacity in FY24-25, ranking as the third-highest globally. This development is particularly crucial as AI data centres consume five to six times more energy than traditional facilities.

Global data centre power demand is projected to grow at 17% annually until 2030, while India's domestic demand is expected to expand at an even faster pace of approximately 33% per year. Extended wait times for power access and permitting delays in the US and Europe are positioning India as an increasingly attractive destination for new capacity investments.

Broader Economic Impact Beyond IT Sector

The data centre boom extends significant opportunities beyond traditional IT infrastructure. Nearly 45% of data centre capital expenditure flows into construction, cooling systems, electrical infrastructure, and specialized equipment, creating substantial downstream opportunities.

India's established supplier ecosystem includes companies across various segments: engineering services from L&T, backup power solutions from Cummins, cooling systems from Voltas, and electrical wiring from Polycab. This domestic capability strengthens the country's position in the global data centre supply chain.

Future Investment Requirements and Opportunities

Building the next phase of capacity expansion will require substantial capital investment. Industry estimates suggest each megawatt of data centre capacity in India costs approximately $4-5 million. To achieve the projected additional 6.4 GW capacity by 2030, the sector will need close to $30 billion in capital expenditure.

Revenue projections indicate strong growth potential, with estimated sector revenue expanding from $1.5 billion in 2025 to $8 billion by 2030, according to Jefferies research. This multi-year investment cycle is positioned to benefit telecom operators, EPC firms, power suppliers, and IT companies across the data centre value chain.