Datacenter Trends in 2025: India’s Digital Infrastructure Revolution

India’s digital landscape is rapidly transforming, with datacenters emerging as the very foundation of this technological revolution. By 2025, the sector is projected to achieve remarkable growth, reshaping how businesses, governments, and individuals interact with the digital world. This unprecedented demand for robust and scalable datacenters is accelerated by a confluence of powerful forces. The explosion of data generated by increasing internet penetration—with 5G services now available in 779 out of 783 districts across the country—the rapid rollout of 5G, and the widespread adoption of cloud computing is undeniable. Furthermore, the rise of data-intensive technologies like AI, the Internet of Things, and real-time applications is pushing the boundaries of what is possible, demanding constant innovation and optimisation within our datacenters. Government initiatives promoting digitalisation and data localisation are further accelerating this growth, positioning India as a future global leader in the digital economy. This convergence of factors signifies a transformative period for our industry, characterised by massive capacity expansion, the integration of cutting-edge technologies, and a critical focus on sustainable practices. Building the future of data infrastructure in India requires both power and responsibility, and it’s a challenge we are ready to embrace.

Exponential capacity expansion

India’s data centre industry has grown by 2.5 times over the last four years at a 24% CAGR. This increase highlights the nation’s growing reliance on digital ecosystems, with cities like Mumbai, Chennai, and Hyderabad leading this remarkable growth. India’s datacentre landscape is experiencing rapid expansion. According to Cushman and Wakefield, the country has the potential for a five-fold increase in datacentre capacity by 2028, driven by multiple growth factors. The surge in digital adoption, increased smartphone penetration, rising internet usage, growing OTT subscriptions, and expanding social media engagement are collectively fuelling unprecedented data consumption. The emergence of AI and Generative AI in 2024 is further accelerating the demand for datacentre expansion. McKinsey’s analysis indicates that AI-ready datacentre capacity will grow at an annual rate of 33% between 2023 and 2030, with a significant portion of new demand specifically targeting facilities equipped to handle advanced AI workloads. This robust growth in datacentre capacity is crucial for India’s digital transformation journey and its ambition to become a global digital infrastructure hub, supporting not just domestic digital growth but also positioning the country as a preferred destination for global data storage and processing needs.

AI and the technology catalyst

Artificial Intelligence is a major growth driver in India’s datacentre landscape. The AI industry is projected to contribute US $957 billion to India’s economy. The government has also approved US $1.24 billion in investments for AI infrastructure, including at least 10,000 GPUs. The adoption of AI across industries such as healthcare, fintech, and logistics has created the need for high-performance computing infrastructure. AI workloads, including machine learning and natural language processing, require advanced facilities with enhanced power and cooling capabilities. Complementing this demand are government programmes like Digital India, which promote data localisation, further boosting the need for domestic infrastructure.

Rise of secondary markets

While tier-1 cities dominate with hyperscale developments, tier-2 and tier-3 locations such as Ahmedabad, Lucknow, Patna, Pune, Vizag, Cochin, Jaipur, Guwahati, and Kolkata are emerging as critical hubs for edge datacentres. These smaller facilities support localised services by reducing latency, catering to the needs of regional businesses and consumers. This trend aligns with the rising demand for real-time applications like IoT, autonomous vehicles, and smart city projects.

Sustainability at the forefront

India aims to achieve 500 gigawatts of renewable energy by 2030 and over 600 gigawatts by 2032. With increasing energy consumption in datacentres, sustainability has become a strategic priority. According to CBRE, operators are adopting renewable energy and efficient cooling systems. India’s geographic diversity offers ample scope for renewable integration, particularly solar and wind energy, in powering facilities. Efforts to optimise Power Usage Effectiveness (PUE) are further improving operational efficiency, demonstrating the industry’s commitment to balancing growth with environmental stewardship.

Investment boom and infrastructure advancements

India’s datacentre market has become a magnet for investments, driven by foreign direct investments (FDI) and strategic collaborations. These investments are directed toward building cutting-edge facilities capable of supporting AI, cloud computing, and IoT. The development of hyperscale and colocation facilities in metropolitan areas is complemented by edge deployments in emerging markets, reflecting a diversified growth approach. According to a recent CBRE report, cumulative investments of approximately USD 60 billion between 2019 and 2024, and this figure is projected to surpass USD 100 billion by the end of 2027. For 2025, nearly 475 MW of new capacity is under construction, with significant developments focused on Mumbai, Chennai, and Delhi-NCR. Despite increasing construction and operational costs, rental demand remains robust. Many operators are future-proofing their facilities with modular designs that can accommodate next-generation technologies like quantum computing and 6G.

Workforce development

The rapid pace of datacentre expansion presents significant challenges in workforce development. The industry faces a shortage of skilled professionals, particularly as the construction pace continues to accelerate across major datacentre hubs. The demand for skilled resources required for construction of datacentres has been falling short of requirements and could constrain execution pace. The talent gap extends across various specialisations, including cybersecurity, data analytics, and advanced IT operations. As the industry continues its rapid expansion with new facilities being constructed across the country, there will be an even greater demand for DC-specific skilled human resources.

Conclusion

India’s datacentre landscape is at an inflection point. The convergence of technology, investment, and sustainability efforts positions the sector as a cornerstone of India’s digital transformation journey. As AI adoption accelerates and digital demands grow, datacentres will remain critical to supporting the nation’s aspirations for economic and technological leadership. The industry’s evolution reflects a commitment to not only building infrastructure but also fostering innovation and environmental responsibility, making India a key hub in the global digital economy.