AI Data Center India (2026–2035)
India’s data center market is small today (~1.4–1.7 GW), but the market is expected to grow by a 4–5 times by 2030. This boom is driven by surging cloud/AI workloads (gen‑AI, enterprise digitization) and India’s vast digital economy (900M+ Internet users, ubiquitous Aadhaar/UPI infrastructure). Updated policies (data centers for ai, data and AI guidelines, semiconductor incentives, a renewables surge) strongly support this growth. In 2025 India added a record 44.5 GW of data center renewable energy (solar/wind) (now ~254 GW of renewables)[4], powering more green data centers.
However, India is way behind other countries such as – the US already has ~53.7 GW of DC capacity (44% global share), China ~19.6 GW, and Singapore ~1 GW. With global hyperscalers spending ~$370–380 B in 2025 and McKinsey projecting ~$6.7 T of DC capex by 2030, India must scale fast to avoid dependence on foreign infrastructure.
Table of Contents
The AI data center India market is forecast a “base” case of ~9 GW in India by 2030, with upside/bear scenarios of ~12–15 GW or ~6–7 GW. Key risks include power/water shortages (60–80% of Indian DCs face high water stress) and chip supply constraints. Mitigation will hinge on renewable integration, advanced cooling (liquid/immersion), and policy support (e.g. tax breaks). For investors, data centers offer 10–20%+ IRRs (long-term leases, high demand) but require heavy up-front capex (India needs ~$25–45 B to add ~8 GW by 2030). Entry points include greenfield development (in partnership with hyperscalers or telecoms), infrastructure funds, and ancillary services (power, cooling, fiber).
AI Data Center India
India’s data center industry is still nascent (≈1.4–1.7 GW installed by 2025), but poised for rapid expansion. Forecasts by analysts like IEEFA and Jefferies see capacity reaching ~8–9 GW by 2030 (roughly a 5× increase). Growth is fueled by AI and cloud workloads: e-commerce, streaming, financial services, and government digital services are migrating to datacenter/cloud platforms. India has ~900M Internet users and generates ~20% of the world’s digital data. The vast public digital infrastructure (UPI payments, Aadhaar ID, ONDC commerce) is creating sustained low-latency demand.
As Turner & Townsend notes, India’s market is “transitioning from a mid-level digital infrastructure market to a leading global hub,” with hyperscalers (AWS, Google, Microsoft) and Indian conglomerates (Reliance, Adani, Tata) committing to large new campuses. In short, India’s data center sector is on an inflection point: current usage is modest, but “if [India] executes well, it can solidify itself as one of the world’s top markets for incremental data centre growth”.
AI Data Center India (2026–2035)
- Market size (2025): ≈1.4 GW (total IT load) with >250 colocation facilities nationwide. Valued at ~$1.2–1.4 B in 2021, now growing at ~25–30% CAGR.
- Growth drivers: (a) AI/Cloud: Generative AI (e.g. large language models) and IoT spur “AI‑ready” facility demand. Indian startups/incumbents are embedding AI (≈90% of startups use AI). (b) Public Digital Infrastructure: Nationwide Aadhaar, digital payments (UPI), e-governance (DigiLocker, ONDC), and 5G rollout rapidly expand data volumes. (c) Industry Shift: Enterprises (Banking, IT, healthcare) are migrating off-premise for scalability. (d) Economy: 7–8% GDP growth and 10%+ growth in digital services create durable demand.
- Projected growth: By 2030, industry sources envisage ~8–9 GW; by 2035 possibly ~12–15 GW. C&W forecasts ~1 GW in colocation today rising to 3–5 GW by late 2030s[14] (all segments included). Hyperscale plants (1–2+ GW each) from global players will also come online (e.g. Google/Adani’s 1 GW Andhra project[15]).
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Key Demand Drivers for AI Data centers
- AI & Machine Learning: The “AI revolution” is the single largest catalyst. Training/serving AI models demands immense compute and storage. Hyperscalers globally are racing to build thousands of high-performance racks. India has begun catering to this: its IndiaAI Mission subsidized 38,000 GPUs and launched an AI supercomputer (Param Siddhi-AI, 3.8 PFLOPs). As AI becomes pervasive (in voice assistants, genomics, finance), enterprise DC usage will multiply. High-performance DCs (liquid-cooled, low PUE) will command premiums.
- Cloud Adoption: Indian businesses are shifting to public and hybrid clouds for flexibility. Cloud revenue (AWS/Azure/Google) in India is growing >30%/yr. Many companies lack internal infrastructure for AI and are leasing racks. The “lift-and-shift” of on-prem workloads to DCs (data sovereignty/compliance demands) is accelerating under policies like data localization.
- Digital Public Infrastructure (DPI): Platforms like UPI (digital payments), Aadhaar, e-Gov, ONDC open new data pipelines. For example, ONDC’s digital commerce networks and GBhuO open networks for public digital infrastructure (mirroring Singapore’s approach) create continuous, low-latency demand. India’s DPI advantage (unique IDs, instant payments) supports sustained DC usage across urban and rural areas.
Government Policy AI Data Centers
India’s recent policy moves heavily favor AI data centers, and green infrastructure:
- AI Strategy & Governance: In Feb 2026 India released AI Governance Guidelines, a principle-based framework to spur “safe, trusted, and inclusive AI”. The guidelines emphasize “AI for All” and democratized models, supporting innovation over restraint. Previous initiatives (NITI Aayog’s National AI Strategy, IndiaAI Mission) have built capacity: e.g. ~38,000 GPUs onboarded through national compute facilities. These policies ensure a stable demand for high-performance data centers to host AI workloads.
- Semiconductor Self-Reliance: The India Semiconductor Mission (ISM) (launched 2021) provides ₹76,000 Cr (≈$10 B) incentives for chip fabs and packaging. By late 2025, ISM 1.0 had approved 10 projects totaling ₹1.60 lakh Cr. Budget 2026 announced ISM 2.0 (₹1,000 Cr in 2026–27) focusing on equipment, materials, and deepening chip design capabilities. India’s domestic chip market (already ~$38 B in 2023) is expected to hit ~$100–110 B by 2030. For data centers, this promises more localized hardware supply (advanced CPUs/GPUs) over time.
- Data Regulation: The Digital Personal Data Protection Act, 2023 (DPDP) governs personal data but has moderated localization mandates. Unlike earlier drafts, it does not force blanket local storage; data can flow abroad for “legitimate purposes.” However, sectoral regulators (RBI for finance, MeitY for certain sectors) may still require copies of critical data to reside in India. Overall, the regulatory trend is to balance sovereignty with global integration – supporting cross-border cloud services while ensuring Indian user data is safeguarded.
- Data Center Policy & Approvals: The government is finalizing a Draft National Data Centre Policy to streamline permissions (land, power, environment) and set quality standards. States (e.g. Karnataka, Gujarat) are offering attractive incentives (cheap land, subsidized power, expedited clearances). At the AI Impact Summit (Feb 2026), the IT minister explicitly offered long-term tax holidays and subsidies for “sustainable ways” of building data centers, acknowledging power and water as key constraints.
- Renewable Energy Targets: India reaffirmed its 500 GW non-fossil goal by 2030 (COP26 pledge). In 2025 alone India added ~44.5 GW of renewables (total ~254 GW by Nov 2025), pushing non-fossil to ~51.5% of capacity. This massive clean capacity build-out (solar, wind, biomass) is critical to supply new data centers. The Electricity Act reforms and initiatives like Green Energy Open Access make it easier for large consumers (like data centers) to procure renewable power.
- Digital Infrastructure (Broadband/Cloud): Projects like BharatNet (rural broadband) and extensions of the National Knowledge Network improve connectivity for edge data centers. Cloud credits and shared infra under Digital India/NIC initiatives encourage government workloads (e-gov services) to migrate to domestic data centers. Such policies indirectly boost demand for co-location and hyperscale facilities in India.
Indian Data Center Market Forecasts
Based on demand drivers, policy, and international trends, we construct three scenarios for India’s DC sector:
- Base Case: Indian Data Center Market is expected to reach ≈9 GW by 2030, ≈14 GW by 2035. (5× growth from ~1.7 GW today.) Assumes steady cloud/AI adoption and policy continuation. Capital investment ~\$30–45B (Jefferies: \$30B by 2030[26]).
- Bull Case: Indian Data Center Market is expected to reach ≈12–15 GW by 2030, ~20 GW by 2035. (If AI demand accelerates or India captures more regional workloads.) Could see \$50B+ cumulative capex; occupancies remain high with few new entrants (low vacancy).
- Bear Case: Indian Data Center Market is expected to reach ≈6–7 GW by 2030, ~10–12 GW by 2035. (If grid bottlenecks, regulation, or a slowdown in AI temper builds.) Investment might only reach \$20–25B. This reflects constraints like limited power/water or global capital pullback.
Indian Data Center Market vs Global DC Capacity (2023–2035)
A comparative time-series of installed DC power (GW) would show India’s steep projected climb from ~1.4 GW (2025) to ~9 GW (2030) versus flatter growth in mature markets.
Installed & Projected DC Capacity (GW)
| Region / Country | 2023 | 2025 | 2030 (base) | 2035 (est.) |
| United States | 50 | 54 | 80–90 | 110–125 |
| China | 18–25 | 20–32 | 45–55 | 70–85 |
| Europe | 18 | 21 | 30–35 | 40–50 |
| Singapore | 1.0 | 1.3 | 1.5–2 | 2–2.5 |
| India | ~1.0 | 1.4–1.7 | 8–9 | 12–15 |
| Global | 110 | 122 | 180–210 | 260–320 |
AI Workload Power Density:
A bar chart comparing PB/MW (data handled per MW) or GPU-per-capita for India vs US/China/Singapore (e.g. India’s 13.2 PB/MW vs China’s 4.5 PB/MW[22]) highlights India’s intensive usage of limited DC capacity.
AI/Data Workload Density
| Country | Data handled per MW | Interpretation |
| India | 13.2 PB/MW | High density (capacity constrained) |
| China | 4.5 PB/MW | Large capacity, lower density |
| US | ~5–8 PB/MW (est.) | Balanced hyperscale |
| Singapore | ~8–10 PB/MW | Efficient high-utilization |
| Global avg | ~6–7 PB/MW | — |
Government Incentives AI data centers:
A table summarizing AI and semiconductor incentives by country (e.g. India: ₹76K Cr semicon, data policy; US: $52B CHIPS, 25% ITC; Singapore: S$5B R&D, Green DC grants).
AI Data Centers Policy Benchmark
| Country | DC Incentives | AI Data Center Policy | Semiconductor Policy | Renewable Integration |
| India | Land subsidies, power tariff waivers, tax holidays | India AI Mission, AI guidelines 2026 | $10B Semiconductor Mission | 500 GW RE target |
| US | State tax abatements, energy credits | National AI Initiative | $52B CHIPS Act | IRA clean energy credits |
| China | Subsidized land/power | National AI 2030 plan | $100B+ state funds | AI+Energy mandates |
| Singapore | Green DC grants, moratorium quotas | AI.SG strategy | Chip fab grants | Green DC roadmap |
Outlook on Indian AI data centers
The next decade will define the global geography of artificial intelligence (AI) compute and digital infrastructure. Data center capacity is emerging as a strategic economic asset, comparable to energy and transportation networks in previous industrial eras. While the United States and China currently dominate global AI infrastructure, India is entering a high-growth phase that could reposition it as the third major AI compute hub by the early 2030s.
India’s data center capacity could expand from roughly 1–2 GW today to 12–15 GW by 2035 under baseline assumptions, with upside potential toward 20 GW if AI adoption accelerates and energy infrastructure keeps pace. This trajectory would elevate India’s global capacity share from roughly 1% today to approximately 4–6% by the mid-2030s.