Summary:
India’s data centre (DC) capacity is set to witness remarkable growth, with operational capacity expected to rise from 1,150 megawatts (MW) in December 2024 to around 2,000-2,100 MW by March 2027, this is to a report by the rating agency ICRA. This expansion is driven by increasing data consumption and the push for data localisation. To meet this demand, Indian DC operators are projected to invest between Rs. 2,00,000 crore and Rs. 2,30,000 crore (US$ 22.91–26.34 billion), developing a pipeline of 3–3.5 gigawatts (GW) over the next seven to ten years. Mumbai, Chennai and Hyderabad are expected to house 75% of the upcoming data centres, with Mumbai taking the lead due to its numerous landing stations, making it a strategic location for connectivity.
ICRA also highlighted the role of hyperscalers in driving demand, with global trends showing several 300 MW-plus deals signed to support artificial intelligence (AI) workloads. Technologies like cloud computing, 5G deployment, machine learning and the Internet of Things (IoT) are further accelerating growth. Currently, co-location services generate 80 to 85% of DC revenue, but rising competition among developers has put pressure on rental rates. The number of DC developers has grown from 5 in 2019 to 18 in 2025, giving hyperscalers stronger negotiating power and influencing return on investment and payback periods. ICRA anticipates that supportive regulatory policies and the sector’s infrastructure status will sustain long-term growth.
Source: IBEF
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