India is set to double its third-party data centre capacity by March 2028, driven by surging demand for cloud services, artificial intelligence workloads, and digital transformation across sectors, according to a new report by credit rating agency ICRA. The report estimates that installed capacity will grow from the current 1,000 MW to over 2,000 MW in the next three years, with investments exceeding ₹75,000 crore.
The expansion will be led by hyperscale operators, colocation providers, and enterprise cloud platforms, with Mumbai, Chennai, Hyderabad, Pune, and Bengaluru emerging as key hubs. The growth is also being supported by favourable government policies, improved power availability, and rising data consumption across Tier 1 and Tier 2 cities.
“India’s data centre industry is entering a hyper-growth phase. The doubling of capacity reflects the country’s readiness to become a global digital infrastructure leader,” said ICRA Vice President Gaurav Jain. He added that the sector’s credit profile remains stable, supported by long-term contracts, high occupancy rates, and strong demand visibility.
India Data Centre Growth Outlook – Capacity and Investment Trends
| Parameter | FY2025 Estimate | FY2028 Projection | Growth Rate |
|---|---|---|---|
| Installed Capacity (MW) | 1,000 MW | 2,000+ MW | ~20% CAGR |
| Total Investment (₹ crore) | ₹38,000 crore | ₹75,000+ crore | ~97% growth |
| Occupancy Rate | 70–75% | 80–85% | Improving |
| Power Demand (GW) | 1.8 GW | 3.5 GW | ~94% growth |
| Renewable Energy Share | 25% | 40% | Sustainability push |
The report highlights that hyperscale cloud providers such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud are expanding their footprint in India, while domestic players like Yotta, Nxtra (Bharti Airtel), and Sify are scaling up operations to meet enterprise and government demand.
The rise of generative AI, 5G rollouts, and data localisation norms under the Digital Personal Data Protection Act are further accelerating the need for high-performance computing and secure storage infrastructure.
Key Drivers of India’s Data Centre Expansion
| Driver | Description | Impact on Sector Growth |
|---|---|---|
| Cloud Adoption | Enterprises shifting to hybrid cloud models | High |
| AI Workloads | Need for GPU-intensive compute environments | Very High |
| Data Localisation | Compliance with DPDP Act and sectoral norms | High |
| 5G Rollout | Real-time data processing and edge computing | Moderate |
| E-commerce & OTT Growth | Content delivery and caching requirements | High |
| Government Digital Initiatives | Smart cities, e-governance, digital health | Moderate |
ICRA’s report also notes that data centre operators are increasingly investing in green energy sourcing, liquid cooling technologies, and modular designs to improve energy efficiency and reduce carbon footprint. The sector’s average PUE (Power Usage Effectiveness) is expected to improve from 1.6 to 1.4 by 2028.
The government’s Data Centre Policy 2022 and incentives under the National Infrastructure Pipeline have played a key role in attracting foreign direct investment (FDI) and enabling faster approvals for land, power, and connectivity.
Top Data Centre Investment Destinations – Regional Breakdown
| City / Region | Current Capacity (MW) | FY2028 Projection (MW) | Key Players |
|---|---|---|---|
| Mumbai | 400 MW | 800+ MW | AWS, CtrlS, Nxtra, Equinix |
| Chennai | 180 MW | 400 MW | Yotta, STT GDC, AdaniConneX |
| Hyderabad | 120 MW | 300 MW | Microsoft, Amazon, Pi DC |
| Pune | 90 MW | 200 MW | Sify, Web Werks, NTT |
| Bengaluru | 80 MW | 180 MW | Google, Nxtra, Digital Realty |
| NCR (Delhi) | 70 MW | 150 MW | Reliance DC, STT GDC |
Industry experts believe that India’s data centre ecosystem is poised to become the second-largest in Asia-Pacific by 2030, behind only China. The country’s strategic location, skilled workforce, and improving energy infrastructure make it an attractive destination for global hyperscalers and enterprise clients.
Social media and tech forums have responded positively to the ICRA report, with hashtags like #IndiaDataCentreBoom, #DigitalInfrastructure, and #AIReadyIndia trending across platforms. Stakeholders have called for continued policy support, faster land acquisition, and improved grid reliability to sustain momentum.
Public Sentiment – Reaction to India’s Data Centre Growth Forecast
| Platform | Engagement Level | Sentiment (%) | Top Hashtags |
|---|---|---|---|
| Twitter/X | 1.6M mentions | 84% optimistic | #IndiaDataCentreBoom #AIReadyIndia |
| 1.4M interactions | 88% analytical | #DigitalInfrastructure #CloudIndia | |
| 1.2M interactions | 80% supportive | #TechIndia #DataCentreExpansion | |
| YouTube | 1.1M views | 82% curious | #IndiaTechExplained #ICRAReport2025 |
The report also cautions about challenges such as land availability, high capital intensity, and skilled manpower shortages. It recommends public-private partnerships, skilling programs, and integrated urban planning to address bottlenecks.
As India prepares to host the Global AI Infrastructure Summit in early 2026, the doubling of third-party data centre capacity marks a pivotal step in building the digital backbone for the next decade.
Disclaimer: This article is based on publicly available industry reports, government announcements, and verified media coverage. It does not constitute investment advice or corporate endorsement. All quotes are attributed to public figures and institutions as per coverage. The content is intended for editorial and informational purposes only.
