NEW DELHI– India’s installed data center capacity is projected to expand from about 1.5 gigawatts currently to nearly 14 gigawatts by 2035, growing at an annual rate of 20 to 24 percent, according to a report released Tuesday.
The report said the rapid expansion of data centers reflects the strong growth of India’s digital economy, which contributed about $402 billion, or 11.74 percent of gross domestic product, in fiscal year 2022-23. The digital economy is expected to account for nearly 20 percent of national income by fiscal year 2029-30, surpassing both agriculture and manufacturing.
Data centers sit at the core of India’s digital infrastructure, supporting services ranging from e-governance and financial technology to media streaming, e-commerce, and increasingly advanced artificial intelligence workloads.
The report said India’s data center market has reached a clear inflection point, driven by widespread cloud adoption, data localization requirements, and the emergence of AI across industries. These factors have created a strong and sustained demand environment for digital infrastructure.
To support the next phase of growth, the report emphasized the need for a stable and future-ready legislative and tax framework that accounts for the capital-intensive nature and technological complexity of modern data centers. Such policies, it said, could help India translate its digital scale into a long-term global competitive advantage.
The expansion is being backed by substantial investment commitments from domestic and international data center operators, real estate developers, and infrastructure investors over the next decade.
Currently, most of India’s data center capacity is concentrated in major metropolitan areas including Mumbai, Chennai, Delhi-NCR, Bengaluru, Hyderabad, Pune, and Kolkata, largely due to proximity to customers, reliable power supply, undersea cable connectivity, and hyperscaler investments.
At the same time, tier-two cities are emerging rapidly as hubs for edge data centers, supported by rising data consumption and improving infrastructure.
The report also highlighted the role of central and state governments in driving new investment through clearer regulatory frameworks, policy predictability, and comprehensive tax guidance aimed at supporting long-term growth in the data center sector. (Source: IANS)
