India's data centre capacity to surge six-fold to 10.5 GW by FY31: Morgan Stanley
India's data centre capacity is set to surge nearly six-fold — from 1.8 GW to approximately 10.5 GW by FY2031 — driven by rapid artificial intelligence adoption, data localisation mandates, and geopolitical realignments, according to a new report by investment bank Morgan Stanley.
AI Workloads Drive the Bulk of Demand
Artificial intelligence workloads alone are projected to account for roughly 6.8 GW of the total incremental capacity, making them the single largest demand driver. Morgan Stanley's report notes that rising demand for low-latency processing, increasing compute intensity, and tighter localisation norms are compounding this trend. This comes amid a broader global race among hyperscalers to secure AI-ready infrastructure in high-growth markets.
A $60 Billion Industrial Capex Pipeline
The report projects an industrial capital expenditure pipeline of approximately $60 billion linked to incremental data centre capacity in India, covering land, power systems, cooling infrastructure, and networking equipment. Of this, over $20 billion is earmarked specifically for the power ecosystem, as energy-intensive facilities demand significant grid and storage investment. Operators are reportedly shifting increasingly towards renewable energy and storage solutions to manage both cost and sustainability pressures.
Policy Push Accelerating Capital Formation
Morgan Stanley highlighted that government policy measures — including data localisation stipulations, infrastructure status for data centres, and fiscal incentives — are accelerating capital formation and attracting global hyperscalers to Indian shores. The report quoted directly:
