Investment in Indian data centres is poised to surpass $100 billion by 2027, according to a report by CBRE, a global real estate advisory firm. Between 2019 and 2024, India has attracted $60.3 billion in investment commitments from domestic and international players, reflecting a robust growth trajectory in the sector.
Surge in data center capacity
India’s data centre capacity is set to expand significantly, with projections estimating it will reach approximately 2,070 megawatts (MW) by the end of 2025. Currently, the capacity stands at around 1,255 MW, with 475 MW under construction in key hubs, including Mumbai, Chennai, and the Delhi-National Capital Region (NCR). By the end of 2024, the total capacity is expected to reach 1,600 MW, with $19 billion worth of investments committed so far this year.
Mumbai continues to dominate India’s data centre landscape, followed by Chennai, Delhi-NCR, and Bengaluru. These cities account for 90% of the country’s total data centre stock, which currently stands at 19 million square feet (msf). The figure is projected to expand to 31 msf by the end of 2025.
Leading states in investment
Maharashtra, Tamil Nadu, Telangana, Uttar Pradesh, and West Bengal have emerged as frontrunners in attracting cumulative investment commitments. These states have capitalised on government incentives and regional growth strategies to establish themselves as pivotal players in the data centre ecosystem.
Anshuman Magazine, Chairman and CEO of CBRE for India, South-East Asia, the Middle East, and Africa, highlighted the significant role of the banking, financial services, and insurance (BFSI) sector, alongside technology and telecommunications industries, in driving demand.
“The demand from BFSI, technology, and telecommunications sectors, combined with state-level policy incentives, will continue to fuel growth. India is fast becoming one of the most attractive destinations for data centre operators globally,” Magazine noted.
State-level incentives
Several states, including Maharashtra, Telangana, and Tamil Nadu, have introduced targeted incentives to foster growth in the data centre industry. These states have deemed data centres as “essential services,” providing benefits such as streamlined approvals, reduced tariffs, and infrastructure support to encourage investment.
Expansion beyond major hubs
The CBRE report also noted a growing trend toward expanding data centre operations into tier-II cities such as Ahmedabad, Kochi, Visakhapatnam, and Lucknow. Factors such as rising regional data consumption, cost-efficiency advantages, sustainability initiatives, and the increasing demand for artificial intelligence (AI)-driven technologies are driving this shift.
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These emerging cities are expected to play a critical role in diversifying India’s data centre footprint while addressing the needs of regional consumers. The government’s push for digitalisation, along with increased internet penetration in smaller cities, has further bolstered this trend.
Key demand drivers
As digitalisation accelerates across sectors, the BFSI and technology industries are expected to remain the primary demand drivers for data centres in India. Telecommunications companies, particularly with the rollout of 5G services, are also anticipated to contribute significantly to this demand.
The growing adoption of cloud computing, AI applications, and data analytics is further boosting the need for robust and scalable data centre infrastructure. Companies are increasingly investing in infrastructure to meet regulatory requirements and consumer expectations for data security and seamless digital experiences.
Future prospects
India’s strategic location, combined with its large and rapidly growing digital economy, positions it as a key global player in the data centre market. With favourable government policies, an influx of foreign investment, and technological advancements, the sector is set to witness unprecedented growth.
As the world’s data consumption continues to rise, India’s data centre industry stands at the forefront of innovation and investment, ensuring its role as a critical hub for digital transformation in the years to come.
