India's data centres: new engine of global growth

India’s data centre market is now entering one of its most decisive phases. The country’s evolving into a full-fledged infrastructure powerhouse, with growth projections placing it among the world’s most significant contributors to digital capacity in the coming decade.

According to our Data centre construction cost index 2025-2026, the country’s acceleration reflects an alignment of economic momentum, technology adoption and policy support. Investments in AI-ready facilities, rising power demands and the expansion into high-growth emerging cities are driving growth. This is alongside a focus on sustainability through green standards and renewable energy. 

Against this backdrop, India stands at an inflection point. The projected increase in cloud data centre capacity from approximately 1.28 GW today to nearly four to five times this level by 2030 signals not just expansion, but, cruically, also structural transformation. 

Key factors shaping India’s data centre shift 

Some factors shaping this transition include:  

1. India’s strategic positioning 

India’s transitioning from a mid-level digital infrastructure market to a leading global hub. Hyperscalers and cloud providers are increasingly prioritising India for regional deployments, thanks to scale, cost advantages and long-term demand.  

If this current trajectory continues, India could surpass mature markets like the UK and parts of Europe in incremental growth. 

2. Critical enablers powering India’s rise 

India’s momentum is powered by a strong combination of factors:  

• Land availability: Availability of large parcels near major metros and emerging Tier‑2 cities make scaling feasible and efficient.  
• Power: Reliable, expandable power supply, with growing renewable integration, is becoming a strategic differentiator.
• Talent: A strong workforce with capabilities in operations, cybersecurity and automation allows for the management of complex, sophisticated facilities.
• Supportive policy: Regulations governing data storage, renewable energy and ease of doing business are improving investor confidence. 

3. Growth catalysts driving the next wave 

Generative AI and cloud adoption are driving exponential increases in demand for processing capacity. The country’s digital public infrastructure, built on platforms such as UPI, India Stack and Open Network for Digital Commerce (ONDC), is reinforcing this momentum. Demand for low-latency infrastructure has created this sustained demand. 

Major hyperscalers such as AWS, Google and Microsoft, alongside colocation players, have already committed significant long‑term capital, signalling a growth story that’s just getting started. 

Challenges that require deliberate focus 

Although the opportunity is strong, the sector also faces challenges. This includes: 

• Energy intensity: As one of the most energy-intensive asset classes, data centres will push India to balance growth with sustainability initiatives.
• Regulatory delays: Obtaining land and power approvals can adversely impact project timelines.
• Talent gaps: Advanced cooling, automation and AI-driven operations require specialised skills and talent.
• Climate resilience: Rising temperatures and reliance on coal increase the need for efficient cooling and renewable integration. 

These challenges require focused attention if India wants to keep its momentum. If it executes well, it can solidify itself as one of the world’s top markets for incremental data centre growth, alongside the US and China. 

What sets India apart 

India stands out not just for the pace of its growth, but also for the unique foundations that underpin it.  

The combination of scale, cost advantages and a strong focus on sovereignty positions India as a top data centre market globally over the coming decade.   

Scale and cost advantage 

With more than 900 million internet users and nearly 20% of the world’s data generated in the country, India offers a scale that few markets can match.

“This appeal is reinforced by its cost competitiveness.”    

For example, Mumbai’s construction cost of US$6.64/W is second only to Shanghai’s US$6.12/W, making India highly attractive for hyperscalers and colocation providers seeking to build cost efficient, future-ready infrastructure. 

Market structure 

Metro cities such as Mumbai, Chennai, Hyderabad and Bengaluru continue to dominate the data centre landscape because of their strong connectivity and power availability.  

Meanwhile, tier-two and tier-three cities are emerging as credible lower-latency alternatives, supporting regional development and relieving pressures on tier-one metros.  

Policy and ecosystem differentiators 

Policy direction and ecosystem maturity add another layer of differentiation for India. ‘Make in India’ – a government programme that promotes building and manufacturing within the country – encourages domestic production and infrastructure self-reliance.  

“The idea of a Sovereign Data Cloud underscores national priorities surrounding data sovereignty, security and compliance.”   

Additionally, homegrown platforms such as UPI, Zoho and Arattai showcase India’s ability to build indigenous digital ecosystems. This strengthens the country’s self-reliance and signals a growing confidence in shaping its own digital path. 

Strategic imperatives for sustainable growth 

To begin with, accelerated integration of renewable green energy through renewable sourcing and onsite generation will ensure the country’s data centre growth aligns with national sustainability commitments.  

At the same time, data centre operators will need to adopt advanced cooling solutions such as liquid cooling, immersion cooling and AI-driven thermal optimisation. This is to manage rising temperatures and improve energy efficiency.  

“Workforce development must become a priority, requiring strong partnerships between industry and academia to develop specialised training, skills and certification pathways.”  

Finally, policy incentives such as tax benefits for green data centres and quick approval processes for renewable energy can help create a more supportive environment for sustainable growth. 

The road ahead 

Buoyed by a booming internet economy, supportive policies and strong investment momentum, India is transitioning from a digital consumer to a digital infrastructure powerhouse. 

The next decade will depend on balancing growth with sustainability and strengthening regional infrastructure. This is alongside preparing for next-generation technologies like AI and 5G to emerge as a global hub in the coming decade. 

If India delivers on these priorities, it will not only scale - but lead - in the global data centre landscape.