India’s data centre (DC) capacity is projected to increase to 2,000-2,100 MW by March 2027, up from approximately 1,150 MW in December 2024, according to ICRA. This growth is attributed to the rise in data usage and localisation initiatives. Data centre operators in India are expected to invest Rs 2-2.3 lakh crore, with a pipeline development of 3-3.5 GW to be completed over the next 7-10 years.

Driven by the needs of artificial intelligence (AI), the global data centre market has seen several large deals, with India set to follow suit. ICRA also highlighted that favourable policies and infrastructure status will significantly contribute to the sector’s growth. India’s major data centre hubs include Mumbai, Chennai, and Hyderabad, with co-location services playing a major role in revenue generation.

ICRA also noted that the growing number of data centre developers in India may impact rental prices, as hyperscalers are gaining more negotiation power.