New Delhi — India’s data center market is projected to grow from about $1.7 billion in fiscal 2026 to roughly $6.8 billion by fiscal 2030, driven by artificial intelligence workloads, rising digital consumption and increased cloud adoption, according to a KPMG in India report.
India’s share of the global data center market is expected to nearly double from 2 percent to 3 percent in fiscal 2026 to about 5 percent by fiscal 2030.
The report said the sector’s growth is supported by strong demand, large-scale investments and favorable government policies.
Installed data center capacity has more than tripled since fiscal 2019 to about 1.9 gigawatts in fiscal 2026. An additional 4.5 gigawatts of capacity is expected to be added over the next five years.
Demand is increasingly being driven by hyperscale cloud providers, global content platforms and AI-focused companies, marking a shift from the sector’s traditional reliance on enterprise and telecommunications customers.
AI and high-performance computing workloads are projected to account for about 55 percent of India’s total data center capacity by fiscal 2030.
The shift is increasing demand for high-density, AI-ready infrastructure equipped with advanced cooling systems, greater power capacity and graphics processing unit-intensive architectures.
India’s relatively low construction and power costs, along with its large pool of information technology and AI professionals, strengthen its competitive position in the global market, the report said.
Demand is also supported by India’s more than 950 million internet users, over 660 million smartphone users and rapidly increasing data consumption.
Data localization requirements, including those under the Digital Personal Data Protection Act, are expected to further increase demand for domestic data center capacity.
More than $120 billion in investments have already been committed by hyperscale companies, global data center operators and Indian businesses, according to the report.
Rohan Rao, partner for mergers and acquisitions consulting at KPMG in India, said the sector has reached a point where demand, capital and technological advances are combining to drive large-scale infrastructure development.
“The transition toward AI-led workloads is fundamentally changing the design, scale and economics of data centres across the country. With strong domestic demand and favourable cost structures, India is well positioned to become a key node in the global digital infrastructure ecosystem,” he added. (Source: IANS)
