India’s data centre capacity is on track to more than double by FY27, as per a report by ICRA. The country’s current capacity, which stands at 950 megawatts (MW), is expected to increase to 2,100 MW over the next few years. This growth is driven by India’s rapidly expanding digital ecosystem and the rising need for data localisation.
Key Growth Drivers
ICRA estimates that ₹50,000-55,000 crore will be invested to achieve this increase in capacity. Several factors are contributing to this rise, including affordable data plans, the proliferation of smartphones, and the rapid adoption of new technologies. Additionally, platforms like social media, e-commerce, OTT services, and gaming are contributing to a massive surge in data usage. That’s why India’s data centre capacity is projected to double, positioning the country as a growing hub in the global digital infrastructure landscape.
According to Anupama Reddy, Vice President of ICRA, the boom in data demand and the government’s push for data localisation are key factors reshaping India’s data centre industry. This transformation is expected to significantly boost the sector’s growth in the coming years.
AI and Hyperscaler Demand
The rise of artificial intelligence (AI) is another major driver of data centre expansion. AI-led demand is expected to increase significantly over the next three to five years, creating new opportunities for the industry. Additionally, sectors such as banking, IT, and hyperscalers are driving the need for co-location services, where multiple companies share data centre space. As a result, data centre revenues are forecast to grow by 23-25% year-on-year in FY2025.
Strategic Locations
Currently, 95% of India’s data centre capacity is concentrated in six major cities, with Mumbai and Chennai at the forefront. Mumbai alone accounts for more than 50% of the total capacity, due to its strategic advantages in connectivity and reliable power supply. As the industry grows, Mumbai will continue to be the central hub for data centre development.
Green Energy Initiatives
Sustainability is also becoming a priority for Indian data centre operators. Investments in green energy, currently below 5%, are expected to rise to 20-25% by 2028. This shift reflects the industry’s increasing focus on environmentally responsible practices. As more data centres adopt green power, the sector is expected to align with global sustainability goals.
