India’s fast-growing data centre industry is primarily centred around Mumbai. India’s financial capital is one of the fastest-growing markets in the Asia-Pacific region and is likely to grow beyond 1GW of operational capacity by the end of 2026, a recent report by global real estate services provider Cushman & Wakefield says.

However, in the recent past, India’s data centre industry has begun to look beyond Mumbai into cities like Hyderabad, Chennai, Delhi NCR, Pune and Bengaluru.  

India boasts of 1.6GW of operational capacity when it comes to data centres, the second-largest market in the Asia-Pacific region. When it comes to the development pipeline of data centres, the South Asian country ranks among the top three markets, with 3.1GW either under construction or proposed, according to the report.

The Cushman & Wakefield report argues that a number of second-tier cities like Hyderabad, Chennai, Delhi NCR and Pune are also fuelling the incremental growth in the Indian data centre industry. In the report, Hyderabad is cited as the leading secondary market in the Asia Pacific and ninth globally. India’s IT hub Bengaluru is also ranked as a tertiary data centre market within the regional data centre landscape.

In India, especially in Mumbai, Hyderabad and Pune, hyperscale demand remains a key driver of expansion. AI workloads and large-scale cloud deployments are increasingly influencing capacity expansion strategies across multiple Indian markets. The report also points to the rise of locations such as Vizag, which is aiming to be a future AI hub, reflecting a larger shift toward scalable markets capable of supporting next-generation digital infrastructure.

The scale of India’s long-term expansion trajectory further reinforces the growth seen to date and that projected. More than 10.5GW of capacity remains at the land stage, reflecting robust future development potential as operators continue to secure sites and prepare for sustained demand.  Amidst all this, the Indian market remains structurally underpenetrated, with data centre density at about 943,000 people per MW, indicating major space for further growth. There has further been a decline in vacancy to the tune of 12.9% as of Q4 2025, pointing to sustained absorption of new capacity and strengthening demand fundamentals.

A separate report published by KPMG in late May says that India is facing a fast-changing digital infrastructure storm and is experiencing an exponential shift, propelled by new regulatory requirements for data localisation, which are leading to a robust growth in AI-driven workloads, and the widespread adoption of 5G technology.

According to the KPMG report, these factors have compelled the industry to alter its direction; moving away from tardy progress and into a period of accelerated expansion. As such, KPMG believes that right now, the biggest challenge to scaling up is not a lack of demand but the sheer complexity of meeting the demand. The industry is currently using fragmented service providers who work in silos across the data centre space - be it construction, technology, or cooling, it says. But the market needs to offer a seamless service that covers everything from planning and building to deploying, and operationalising. It also needs to adapt to high-value areas like capital markets, telecom, digital transformation, and ESG frameworks to become a global force in the coming years, KPMG adds.

On the AI readiness gap, KPMG says that older Indian facilities still rely on legacy air-cooling designs that simply cannot handle the intense heat of modern GPU clusters. Upgrading from standard raised floors to more advanced cooling and new power sourcing is not just an engineering headache; it is a massive multi-stakeholder delivery risk, KPMG continues.

Capital efficiency is also a challenge when it comes to India. International investors want to enter India, but they often hit a brick wall of confusing land acquisition laws and state -level power regulations.

Data centres use huge amounts of energy, so meeting global sustainability benchmarks is
crucial. By focusing on efficient power usage and locking down renewable energy agreements, operators align with global ESG expectations. This makes them much more attractive to investors. In addition, India allows 100% Foreign Direct Investment (FDI) under the automatic route for data centres, which lets offshore capital flow smoothly into onshore operations.

KPMG believes that India's digital appetite is massive, backed by favourable government policies and a stable economy. With 1bn internet users and businesses rushing to the cloud, building domestic data centres is now a necessity.

KMPG report, citing industry data, says that the total sector revenue is on track to hit an estimated $45.69bn by 2033. For AI -specific infrastructure, that niche market was worth about $588.6mn in 2024. KPMG expects it to skyrocket to $3.55bn by 2030, growing at a massive
35.1% CAGR.

The Indian data centre market is up for grabs as the window of opportunity is still wide, KPMG says, but it will not stay that way forever. By 2030, the big players are expected to consolidate the market. They already know that simply offering raw real estate is not enough anymore. Integrated partners who can combine complex physical engineering, specialised AI readiness, regulatory mastery and financial structuring into one cohesive lifecycle partnership are best suited to succeed, KPMG says.