India's artificial intelligence infrastructure buildout could create a $23 billion investment opportunity over the next five years, driven by the projected deployment of 650,000–700,000 GPUs across domestic data centres, according to a report released on Wednesday, 27 May 2025 by Avendus Capital. The findings signal a structural shift in how capital is flowing into India's digital backbone.

Capacity Set to Nearly Triple by 2030

India's total built data centre capacity is forecast to grow at a 26% compound annual growth rate (CAGR), nearly tripling from 1.6 GW in 2025 to 5 GW by 2030, according to the Avendus Capital report. Developers already have an active pipeline exceeding 3 GW — including 1 GW dedicated to AI workloads — requiring a total capital outlay of approximately $25 billion over the same period.

This comes amid a broader surge in cloud adoption, enterprise digitisation, and the emergence of indigenous large language models (LLMs), all of which are compounding demand for high-density compute infrastructure.

India's AI Market on a Steep Growth Curve

The AI market in India is projected to expand from $13 billion in 2025 to $131 billion by 2032, at a 39% CAGR, according to the report. This trajectory is supported by rising enterprise AI adoption and sustained government and private investment in domestic AI capabilities, including homegrown LLM development.

Notably, the dual demand from both AI-specific workloads and conventional cloud and digital services is already generating significant transaction momentum in the sector.

What the Industry Is Saying

Vaibhav Garg, Director of Infrastructure and Real Assets Investment Banking at Avendus Capital, said: 'AI adoption is emerging as a significant catalyst for next-generation infrastructure investments in data centres, alongside sustained demand from cloud and digital workloads.'

Garg added that public markets are expected to play a growing role in funding this expansion: '...we also expect public markets and other strategic transactions to play a key role in funding India's data centre growth, with 3–4 IPOs expected in the next three years.'

GPU Infrastructure Emerges as High-Return Segment

The Avendus report identifies GPU infrastructure as a particularly high-return segment within India's data centre ecosystem. At current capital expenditure and pricing levels, large-scale GPU deployments can deliver equity IRRs — the annualised return on shareholder capital — of over 28% on a hold-to-maturity basis. Global data centre transactions are currently being executed at EBITDA multiples of 20–30 times, reflecting intense institutional interest in the asset class.

Over the last three years, this demand has already translated into $5 billion in transaction activity, backed by global institutional investors, infrastructure funds, and strategic operators.

Mumbai Remains the Dominant Hub

Mumbai is expected to retain its position as India's largest data centre hub, accounting for nearly half of the country's installed and upcoming capacity over the next five years, the report noted. The city's established fibre connectivity, power infrastructure, and proximity to financial services clients continue to underpin its dominance.

With IPOs on the horizon and foreign capital actively seeking exposure to India's AI infrastructure story, the sector appears poised for its most consequential growth phase yet.