NEW DELHI — India’s data center sector is seeing rapid growth as artificial intelligence increases demand for high-performance computing infrastructure, with cumulative colocation leasing reaching 2.06 gigawatts in 2025, according to a new report.
Knight Frank India said AI-related workloads now account for nearly 20% of total leasing demand, as generative AI, machine learning and GPU-intensive computing reshape infrastructure needs across industries.
AI-linked colocation leasing reached 348 megawatts in 2025, more than doubling from the previous year, the report said. The surge reflects rising enterprise adoption of high-performance computing following the global AI boom.
The broader data center market in India is also expanding because of hyperscale cloud growth, enterprise digitization, data localization requirements and demand for low-latency digital infrastructure.
Knight Frank said the sector has evolved over the past decade from a fragmented infrastructure market into a strategic institutional asset class, supported by sustained capital inflows and a growing development pipeline.
Despite rapid capacity additions, vacancy levels remain tight across key markets, pointing to continued demand from hyperscalers and large enterprise occupiers.
India’s live data center capacity has grown from about 296 megawatts in 2016 to more than 1.6 gigawatts in 2025, representing a compound annual growth rate of nearly 30%, the report said.
The report said committed and early-stage development pipelines have crossed 8 gigawatts across major markets, signaling strong long-term supply growth.
Mumbai accounts for nearly 47% of India’s total live capacity, helped by strong fiber connectivity, submarine cable landing stations and its position as the country’s financial hub. Chennai has strengthened its role as a gateway for Southeast Asia data traffic.
Hyderabad is also emerging as a major AI and hyperscale infrastructure hub, supported by state policy incentives and growing cloud investments.
Bengaluru, Pune and the Delhi-National Capital Region are developing as specialized markets driven by enterprise demand, global capability center expansion and banking, financial services and insurance workloads. Tier-II cities are also drawing new investment announcements as demand spreads beyond India’s largest data center hubs. (Source: IANS)
