India's operational data centre capacity is projected to surge from 2.2 GW in 2025 to 12 GW by 2030, expanding at a compound annual growth rate (CAGR) of 40 per cent, according to a report released on Monday, 27 July by energy and natural resources consultancy Wood Mackenzie. The findings position India as one of the fastest-growing data centre markets in the Asia-Pacific region.

AI Capacity Leading the Charge

AI-dedicated data centre capacity is set for the most dramatic expansion, rising nearly 24-fold — from 275 MW in 2025 to 6,546 MW by 2030. The growth is being driven by surging demand from hyperscale cloud providers, enterprise digitalisation programmes, and the rapid deployment of artificial intelligence workloads across sectors.

Souhardya Pal, Research Associate at Wood Mackenzie, said the market has crossed a threshold: 'India's data centre market becomes a structural investment thesis. 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 question for developers and investors is no longer whether to enter India, but where and how.'

The Digital Economy Fuelling Demand

India's digital economy was valued at ₹32 trillion in 2025, contributing approximately 12 per cent of GDP. The country serves more than 1.03 billion active internet users and processes around 22 billion UPI transactions every month — a volume that demands robust, scalable infrastructure. India's domestic AI market is separately projected to reach ₹11.7 trillion by 2032, adding further pressure on high-performance computing capacity.

Power Emerges as the Critical Constraint

Reliable, cost-competitive electricity has overtaken land and capital as the primary constraint in data centre development, according to the report. Data centre electricity demand is expected to grow 20-fold by 2040 — from 10 TWh in 2025 — and would account for 7 per cent of India's total electricity demand by that point. This makes energy availability and grid stability central to where new capacity is built.

Geographic Expansion Beyond Traditional Hubs

Maharashtra and Tamil Nadu currently account for approximately 65 per cent of India's installed IT load. However, Wood Mackenzie expects the next wave of investment to spread across Andhra Pradesh, Telangana, Uttar Pradesh, and Karnataka. These emerging markets are already attracting commitments from global hyperscalers including Amazon Web Services and Google, alongside domestic operators such as AdaniConnex, which has announced a development pipeline of 2.6 GW. This geographic diversification signals a maturing market moving beyond its original coastal clusters. With power infrastructure and policy incentives increasingly competitive across multiple states, the race for India's next data centre hub is effectively open.