Will India's 3rd-party data centre capacity hit 2,500 MW by FY28?
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Synopsis
India's data centre capacity is set for a major upgrade, with expectations to reach 2,500 MW by FY2028. This expansion is backed by a robust investment pipeline and favorable policies aimed at enhancing the sector's growth. Discover how this transformative journey is shaping India's digital landscape.
Key Takeaways
- India's data centre capacity is set to double by FY2028.
- Investment of Rs 90,000 crore is expected over the next three years.
- Mumbai is a key player, holding over 50% of operational capacity.
- Renewable energy use is projected to increase significantly.
- Tax exemptions could enhance growth prospects for the sector.
New Delhi, Sep 25 (NationPress) India's digital infrastructure is on the verge of a significant transformation, as the capacity of the nation's third-party data centres (DCs) is set to reach 2,400-2,500 megawatts (MW) by FY2028 — a remarkable increase from 1,250 MW in FY2025, according to a recent report.
The anticipated growth is fueled by a strong investment pipeline estimated at Rs 90,000 crore over the next three years (FY2026-FY2028).
This immediate boost is part of a broader, long-term vision for the sector.
As highlighted by credit ratings agency ICRA, industry stakeholders have unveiled development plans totaling 3.0-3.5 GW to be established within the next 7-10 years, involving an astounding investment of Rs. 2.3-2.5 lakh crore, which emphasizes the crucial role this sector plays in India's digital evolution.
The report indicates that Mumbai remains at the forefront of the Indian DC landscape, accounting for over 50 percent of the existing operational capacity and ranking 21st globally for DC capacity.
The city's advantageous location, dependable power infrastructure, and proximity to cable landing stations make it an attractive hub for data centre operators.
Currently, India represents roughly 3 percent of the global DC capacity of 42 GW, while the United States holds around 50 percent.
This proportion is expected to grow, spurred by rising data consumption and supportive policy measures.
“The recent draft proposal from the Ministry of Electronics and Information Technology (MeitY) to implement a 20-year tax exemption policy could revolutionize India’s data centre growth outlook. This policy aims to reduce initial costs and enhance project feasibility by providing input tax credits on capital expenditures like construction and electrical systems,” said Anupama Reddy, Vice President and Co-Group Head, Corporate Ratings, ICRA.
This long-term incentive is anticipated to draw substantial domestic and global investments, allowing developers to expand operations more confidently, Reddy noted.
The rise of edge DCs (smaller, decentralized centres located nearer to end-users and devices) is also increasingly significant, driven by the demand for low latency (the delay between user actions and system responses) and high-speed needs, especially in sectors such as banking, healthcare, agriculture, and Defence.
Additionally, Indian DC operators are placing greater emphasis on renewable energy, with green power currently fulfilling 15–20 percent of their overall power needs.
The report predicts this figure will climb to 30-35 percent by FY2028 in response to ESG mandates and the necessity to diversify energy sources.
Point of View
It's clear that the country is aligning itself with global digital trends. The strategic investments and policy frameworks being introduced reflect a commitment to enhancing technological infrastructure, which is vital for supporting the growing demands of digital consumption. It positions India as a significant player in the global data centre market, ultimately fostering economic growth and innovation.
NationPress
25/09/2025
Frequently Asked Questions
What is the projected capacity of India's third-party data centres by FY28?
India's third-party data centre capacity is expected to reach between 2,400 and 2,500 megawatts (MW) by FY2028.
What factors are driving this growth?
The growth is driven by a substantial investment pipeline of approximately Rs 90,000 crore and favorable policy initiatives.
Which city leads in data centre capacity in India?
Mumbai continues to dominate, contributing to over 50 percent of the current operational capacity.
How does India's data centre capacity compare globally?
India currently accounts for about 3 percent of the global data centre capacity, which is 42 GW.
What role do renewable energy sources play in India's data centres?
Indian data centre operators are increasingly focusing on renewable energy, with current usage at 15-20 percent, expected to rise to 30-35 percent by FY2028.
