India data centre capacity to hit 6 GW by 2029, needs $110 bn: JLL
Synopsis
India's data centre sector is set for a near-fourfold capacity jump — from 1.6 GW to 6 GW by 2029 — backed by $110 billion in capital. A 20-year Union Budget tax holiday has already pulled in over $50 billion in foreign commitments, and hyperscalers are building 30 per cent of new capacity themselves, turning cities like Hyderabad and Visakhapatnam into gigawatt-scale hubs.
Key Takeaways
India's data centre capacity is projected to grow from 1.6 GW (as of June 2026 ) to 6 GW by 2029 , per a JLL report.
The expansion requires approximately $110 billion in capital — $88 billion for IT equipment alone.
Sector absorption hit 101 MW in H1 2026, more than 20 per cent above the three-year H1 average; vacancy fell to a record low of 2.8 per cent .
The Union Budget's 20-year tax holiday for foreign cloud providers (extended to 31 March 2047 ) has attracted over $50 billion in foreign capital commitments.
Global hyperscalers will self-build nearly 30 per cent of new capacity, delivering 1.4 GW by 2029, with Hyderabad and Visakhapatnam emerging as gigawatt-scale hubs.
Development of Small Modular Reactors (SMRs) by 2033 is flagged as a potential off-grid power solution for large data centre campuses.
India's data centre industry is on course to nearly quadruple its installed capacity — from 1.6 GW as of June 2026 to 6 GW by 2029 — according to a report released on Wednesday, 2 September by global real estate consultancy JLL. The expansion will require approximately $110 billion in capital investment and is being propelled by surging AI workloads and large-scale hyperscale cloud deployments.
Record Absorption and Tight Supply
The sector recorded 101 MW of absorption in the first half of 2026, surpassing the three-year H1 average by more than 20 per cent, according to the JLL report. Supply remained strong, with 85 MW delivered during the same period, concentrated primarily in Mumbai and Chennai.
Accelerated pre-committed deliveries have pushed vacancy levels to a record low of 2.8 per cent, which the report describes as reflecting 'exceptional market fundamentals.' This is among the tightest vacancy readings the Indian data centre market has recorded.
Hyperscale Self-Build Reshaping the Market
Global hyperscalers are fundamentally altering market dynamics by committing to construct nearly 30 per cent of new capacity through self-build facilities. Hyperscale self-build is projected to deliver 1.4 GW by 2029, with major investments transforming cities like Hyderabad and Visakhapatnam into gigawatt-scale hubs alongside established markets such as Mumbai and Chennai.
Rachit Mohan, Managing Director, Data Centre Leasing, APAC, JLL, said: 'India's data centre landscape is undergoing a fundamental transformation unprecedented in scale and ambition. The convergence of landmark tax incentives with massive hyperscale investments for AI-driven infrastructure requirements positions India as a strategic global hub for digital innovation.' He added that the country is witnessing the creation of an entirely new digital infrastructure ecosystem that will reshape India's technology landscape and drive economic growth for decades.
Budget Tax Holiday Draws $50 Billion in Foreign Capital
A key policy catalyst has been the recent Union Budget announcement of a 20-year tax holiday for foreign cloud service providers, extended until 31 March 2047. According to the JLL report, this single policy move has attracted over $50 billion in foreign capital commitments, positioning India as a global hub for routing AI and cloud services while de-risking long-term capital deployment.
This comes amid a broader global race among major economies to attract hyperscale investment, with India's combination of policy incentives, growing domestic demand, and a large engineering talent pool giving it a competitive edge.
Where the $110 Billion Goes
The total capital requirement of $110 billion breaks down as follows: $4 billion for real estate construction, $18 billion for mechanical, electrical, and plumbing infrastructure, and $88 billion for IT equipment including servers and racks. The IT equipment component alone underscores the scale of compute infrastructure being planned for the country.
Small Modular Reactors on the Horizon
Looking further ahead, the JLL report flagged the development of Small Modular Reactors (SMRs) by 2033 as offering future potential for off-grid power solutions for large data centre campuses. Given the enormous energy demands of AI-optimised facilities, clean and reliable power sourcing is increasingly a strategic consideration for operators and investors alike.
With vacancy at historic lows and foreign capital commitments accelerating, India's data centre sector appears set for a structural step-change — though execution at this scale will test both infrastructure delivery timelines and grid capacity in the years ahead.
Point of View
But the real story is the policy-capital feedback loop: a single Union Budget tax holiday has reportedly unlocked $50 billion in foreign commitments — a reminder that India's infrastructure ambitions live or die by fiscal architecture, not just demand signals. The 2.8 per cent vacancy rate suggests the market is already supply-constrained, meaning execution risk on the $110 billion buildout is the next critical variable. Hyderabad and Visakhapatnam's emergence as gigawatt-scale hubs also signals a deliberate geographic diversification away from Mumbai — one that will test state-level grid reliability and land acquisition frameworks. And the SMR footnote for 2033 is worth watching: if AI energy demands continue to scale, off-grid nuclear power for data centres could shift from speculative to strategic faster than most policymakers expect.
NationPress
2 Sept 2026
Frequently Asked Questions
What is India's data centre capacity expected to reach by 2029?
India's data centre capacity is projected to grow from 1.6 GW as of June 2026 to 6 GW by 2029, according to a JLL report released on 2 September. The expansion is driven by AI workloads, hyperscale cloud deployments, and a favourable tax policy environment.
How much investment is required for India's data centre expansion?
The expansion requires approximately $110 billion in total capital. This breaks down into $4 billion for real estate construction, $18 billion for mechanical, electrical, and plumbing infrastructure, and $88 billion for IT equipment such as servers and racks.
What role has the Union Budget tax holiday played in attracting investment?
The Union Budget announced a 20-year tax holiday for foreign cloud service providers, extended until 31 March 2047. According to the JLL report, this policy has attracted over $50 billion in foreign capital commitments and is positioning India as a global hub for AI and cloud services.
Which cities are emerging as major data centre hubs in India?
Mumbai and Chennai remain the established markets, accounting for the bulk of the 85 MW delivered in H1 2026. Hyderabad and Visakhapatnam are emerging as new gigawatt-scale hubs, driven largely by hyperscaler self-build commitments expected to deliver 1.4 GW by 2029.
What is the significance of Small Modular Reactors for Indian data centres?
The JLL report flagged Small Modular Reactors (SMRs), expected to be developed by 2033, as a potential off-grid power solution for large data centre campuses. Given the high and growing energy demands of AI-optimised infrastructure, clean off-grid power is increasingly a strategic priority for operators.
