India's Data Center Boom! Over Rs 55,000 Crore Invested over Last Decade

India’s data centre market has emerged as a powerhouse in the country’s digital revolution, drawing over $6.5 billion in investment commitments over the past 10 years.

Fueled by rapid digitization, booming internet penetration, and supportive government policies, the sector has solidified its position as a critical backbone of India’s economic and technological growth, with projections indicating even greater expansion in the years ahead.

The surge in investments reflects India’s growing appetite for data infrastructure, driven by the proliferation of cloud computing, artificial intelligence (AI), and the rollout of 5G technology. Industry estimates suggest that between 2015 and 2025, both domestic and global players—including giants like Amazon Web Services (AWS), Microsoft, Google, and homegrown firms like CtrlS and Yotta—have committed over $6.5 billion to bolster the nation’s data centre capacity.

Maharashtra, Tamil Nadu, Telangana, and Uttar Pradesh have emerged as key hubs, with cities like Mumbai, Chennai, and Hyderabad leading the charge due to their robust connectivity and IT ecosystems.

A significant milestone came in recent years, with hyperscale data centres accounting for the lion’s share of investments. For instance, AWS pledged $12.7 billion by 2030, while Microsoft earmarked Rs 15,000 crore for facilities in Hyderabad. The Adani Group, through its AdaniConneX venture, has also poured $1.5 billion into projects across multiple cities, aiming for a 1 GW capacity by the decade’s end.

These commitments align with India’s data centre capacity doubling from 637 MW in 2022 to an expected 1,600 MW by the end of 2025, with forecasts predicting a leap to 2,000 MW by 2026.

Government initiatives, such as the Digital India program and data localization mandates, have catalyzed this growth, creating an investor-friendly environment. State-specific incentives, including tax breaks and subsidized power, have further sweetened the deal, drawing firms like ST Telemedia Global Data Centres, which plans a $3.2 billion expansion, and Equinix, now operating multiple facilities after entering the market in 2023.

The economic implications are profound. With India generating 20% of global data but holding just 3% of worldwide data centre capacity, the sector’s expansion is poised to bridge this gap, potentially reducing reliance on imports and boosting local employment.

However, challenges like energy consumption and a skilled workforce shortage loom large, prompting calls for sustainable practices and training programs.

As India’s data centre market continues its upward trajectory—valued at $6.9 billion in 2023 and projected to hit $13.96 billion by 2029—the past decade’s $6.5 billion-plus investment underscores its transformation into a global digital hub, with the promise of even greater strides ahead.