India's operational data centre capacity is projected to surge from 2.2 GW in 2025 to 12 GW by 2030, representing a compound annual growth rate of roughly 40%, according to Wood Mackenzie's latest report, *India's Data Centre Landscape: Powering the Digital Economy*. The report positions the country as one of Asia-Pacific's most compelling infrastructure investment opportunities, driven by a structural growth phase in its data centre market. AI-focused capacity alone is expected to expand nearly 24-fold during the same timeframe, climbing from 275 MW to 6,546 MW as hyperscale cloud providers, enterprise digitalisation, and artificial intelligence accelerate demand for compute infrastructure.
The report details how India's digital economy, valued at INR32 trillion in 2025 and contributing approximately 12% of GDP, supports more than 1.03 billion active internet users and handles around 22 billion UPI transactions monthly. The country's domestic AI market is forecast to reach INR11.7 trillion by 2032, further driving demand for high-performance computing infrastructure. Data centre electricity consumption is projected to grow 20-fold by 2040 from 10 TWh in 2025, ultimately accounting for 7% of total electricity demand. While Maharashtra and Tamil Nadu currently represent around 65% of installed IT load, the next wave of investment is expected to extend across Andhra Pradesh, Telangana, Uttar Pradesh, and Karnataka, with global hyperscalers including Amazon Web Services and Google alongside domestic operators such as AdaniConnex, which has announced a development pipeline of 2.6 GW.
"India's data centre market becomes a structural investment thesis," said Souhardya Pal, Research Associate at Wood Mackenzie. "The convergence of hyperscale capital, AI workload growth and a decade of policy support have created the conditions for India to rival any market in Asia-Pacific." The report finds that dependable, cost-competitive power has emerged as the defining factor in data centre development, surpassing land and capital as the industry's primary constraint. According to Dr. Rashika Gupta, Vice President of Research at Wood Mackenzie, site selection and delivery timelines now hinge on access to firm, round-the-clock power at the node level, with developers who secure their power strategy early through captive generation or long-term renewable power purchase agreements locking in structural cost and sustainability advantages for the life of their assets.
The report explains that captive generation and long-term renewable PPAs have become preferred procurement strategies, enabling developers to cut operating costs while supporting corporate decarbonisation goals. States with liberalised open-access frameworks and competitive intra-state transmission charges are positioning themselves as favoured hubs for new capacity, as power procurement strategy increasingly determines site selection. Water availability has also emerged as one of the sector's most underappreciated investment risks, the report notes, particularly as AI workloads increase rack densities and cooling requirements. In water-stressed markets such as Tamil Nadu and Karnataka, developers adopting closed-loop cooling systems and zero liquid discharge technologies are already reducing freshwater consumption and positioning themselves ahead of potential future regulation.
The report concludes that India's combination of robust digital demand, supportive policy, expanding renewable energy markets, and accelerating AI adoption is creating one of the world's fastest-growing data centre markets. Long-term success, however, will increasingly depend on developers' ability to secure reliable power, manage water resources, and select locations that balance growth potential with infrastructure resilience. The question for investors is no longer whether to enter India's data centre market, but where and how to position for the structural growth ahead.