India's data centre market is on course to expand nearly fourfold — from roughly $1.7 billion in FY26 to approximately $6.8 billion by FY30 — as artificial intelligence workloads, surging digital consumption, and accelerating cloud adoption reshape the country's infrastructure landscape, according to a report released by KPMG in India on Wednesday, 1 July 2025. The findings signal that India's share of the global data centre market is set to nearly double, rising from 2–3 per cent in FY26 to around 5 per cent by FY30.

Scale of Expansion

Installed capacity has already more than tripled since FY19, reaching approximately 1.9 gigawatts in FY26. An additional pipeline of roughly 4.5 gigawatts is expected to come online over the next five years, according to the KPMG report. This trajectory places India among the fastest-growing data centre destinations globally.

The report attributes the momentum to strong demand visibility, large-scale capital commitments, and a supportive policy environment — a combination that analysts say is rare among emerging markets.

AI Workloads Set to Dominate

Artificial intelligence and high-performance computing are emerging as the primary demand drivers. The KPMG report projects that AI-led workloads will account for roughly 55 per cent of total data centre capacity by FY30 — a structural shift from the enterprise and telecom-led demand that historically anchored the sector.

This transition is also changing the physical design of facilities. Operators are increasingly investing in high-density, AI-ready infrastructure featuring advanced cooling systems, higher power requirements, and GPU-intensive architectures. Notably, this mirrors a global pattern where hyperscale and AI-first tenants are displacing traditional colocation demand.

Who Is Driving Investment

Growth is being led by hyperscale cloud providers, global content platforms, and AI-first companies. Cumulatively, over $120 billion in investments have already been committed by hyperscalers, global operators, and Indian players — a figure the report describes as a signal of strong long-term market confidence.

Rohan Rao, Partner, M&A Consulting, KPMG in India, said the sector is at an inflection point. 'The transition toward AI-led workloads is fundamentally changing the design, scale and economics of data centres across the country. With strong domestic demand and favourable cost structures, India is well positioned to become a key node in the global digital infrastructure ecosystem,' he said.

Digital Fundamentals and Policy Tailwinds

India's demand base is underpinned by over 950 million internet users and more than 660 million smartphone users, with data consumption continuing to rise sharply. The country also offers structural cost advantages — low construction costs, competitively priced power, and a large IT and AI talent pool — that strengthen its position relative to other regional hubs.

On the regulatory side, data localisation requirements under the Digital Personal Data Protection (DPDP) Act are expected to materially boost domestic data centre demand by mandating that certain categories of personal data be stored within Indian borders.

What Comes Next

With capital, policy, and technology demand converging simultaneously, the sector's trajectory through FY30 will likely be shaped by how quickly hyperscalers can operationalise committed capacity and whether India's power infrastructure can keep pace with the energy-intensive demands of AI workloads. The next major inflection point to watch is the rollout of DPDP Act implementation rules, which could further accelerate localisation-driven investment.