India Data Center Market to Grow at 14.60% During 2026-32, Driven by AI Integration, Hyperscale Expansion, and Digital Infrastructure Investments - MarkNtel Advisors

NEW DELHI, Nov. 4, 2025 /PRNewswire/ -- According to recent analysis by MarkNtel Advisors, the India Data Center Market is witnessing substantial growth propelled by the rapid digitalization of enterprises, rising demand for cloud-based services, and government-led infrastructure modernization. As organizations accelerate their AI and machine learning adoption, the demand for scalable, high-performance computing infrastructure is intensifying across the nation. Moreover, the rollout of 5G, the expansion of edge computing networks, and increased data localization compliance under India's Data Protection Act are prompting both domestic and global players to expand their data center capacity in India.

The India Data Center Market size is valued at around USD 10.48 billion in 2025 and is projected to reach USD 27.2 billion by 2032. Along with this, the market is estimated to grow at a CAGR of around 14.60% during the forecast period, i.e., 2026–32. Increasing hyperscale investments, cloud infrastructure expansion, and AI-driven automation in data center operations are key contributors to the sector's rapid evolution in India. Leading data center players are actively investing in sustainable facilities powered by renewable energy and liquid cooling technologies to address growing computing needs while adhering to environmental sustainability goals.

Download a FREE PDF Sample of the Report: https://www.marknteladvisors.com/query/request-sample/india-data-center-market.html (Discover the market potential, platform-specific insights, and key industry trends.)

Additionally, the presence of majority of data center companies in Navi Mumbai, facilitates registering 44% of the total market shares. The city benefits from greenfield land availability and proximity to submarine cable landing stations, positioning it as a critical hub for India's digital infrastructure growth.

India Data Center Market Key Takeaways

• Historical Years: 2021–24
• Base Year: 2025
• Forecast Years: 2026–32
• Market Value in 2025: USD 10.48 Billion
• Market Value by 2032: USD 27.2 Billion
• CAGR (2026–32): 14.60%
• Prominent Region: Mumbai
• Leading Component: Hardware Segment
• Dominating End User: IT and Telecom Segment

Role of AI in Modernizing India Data Center Industry

AI is fundamentally transforming data center operations across India by enabling autonomous management, predictive maintenance, and real-time efficiency optimization. Leading Indian companies employ advanced AI algorithms for continuous monitoring of temperature, energy use, and server workload performance to minimize downtime and reduce energy wastage, both critical for operational resilience and cost efficiency. AI-powered predictive analytics effectively anticipate equipment failures and optimize load balancing in hyperscale data centers, which is essential given India's rapid data infrastructure expansion.

Neural network-based capacity forecasting enables data centers to dynamically optimize resource allocation and avoid overprovisioning. This suits India's complex environment, where data center growth must balance rapid digitalization demands with cost and sustainability concerns. AI-driven sustainability analytics help operators achieve carbon neutrality goals by optimizing Power Usage Effectiveness (PUE), potentially reducing annual energy consumption by 20–30%. Such integrations align with India's 2070 net-zero emission targets and ongoing commitments to sustainable growth.

View Full Report (All Data, In One Place): View Full Report (All Data, In One Place): https://www.marknteladvisors.com/research-library/india-data-center-market.html (Explore in-depth analyses, technological trends, and investment patterns.)

Significant AI-driven initiatives and expansions exemplify this transformation:

• AdaniConneX's AI-Ready Data Centers in Chennai and Noida, launched from 2022 onwards, feature advanced liquid cooling solutions and AI-powered real-time infrastructure monitoring to support high-density AI workloads, blending sustainability with AI optimization.
• Reliance Jio's AI Data Centers, developed in strategic partnership with NVIDIA, are focused on deploying NVIDIA's GH200 Grace Hopper Superchip and DGX Cloud services. These centers aim to establish India's first GPU-as-a-service cloud infrastructure to power large-scale generative AI applications, data analytics, and public sector AI projects, although exact locations remain undisclosed.
• ST Telemedia Global Data Centres (STT GDC India) is expanding its footprint in Pune and Bengaluru with upgrades to support high-density compute racks optimized for AI and machine learning workloads. These data centers feature enhanced power and cooling systems designed for the demanding needs of AI training, serving cloud providers, telecoms, and government clients.
• CtrlS Data Centers' AI Mega Campus in Hyderabad is designed for GPU-intensive AI applications and uses immersion cooling and AI-driven energy management systems to enhance efficiency and reliability.
• Yotta Infrastructure's Navi Mumbai Campus deploys AI and GPU clusters optimized for AI development in partnership with NVIDIA, supporting AI-as-a-Service platforms for startups and research institutions.

Additionally, AI facilitates smarter energy orchestration and predictive carbon-aware decision-making, crucial for India's environmentally conscious data center clients. Modern AI data centers harness liquid immersion cooling, direct-to-chip cooling, and intelligent load balancing to significantly improve energy efficiency.

What Are the Government Policies and Digital Initiatives Supporting India Data Center Industry Growth?

India data center industry growth is strongly backed by a series of government policies and digital transformation initiatives that create a conducive environment for investment, infrastructure development, and sustainability.

Digital India Program
This flagship government initiative aims to enhance digital infrastructure and promote digital inclusion across the country. By accelerating cloud adoption, e-governance, and the digital economy, it significantly increases demand for scalable data center infrastructure nationwide.

Draft National Data Centre Policy (2025)
The finalized draft policy offers up to 20 years of conditional tax exemptions for operators, input tax credits on capital goods like HVAC and electrical equipment, 100% electricity duty exemption, and infrastructure status designation. It proposes single-window clearances for expedited approvals, development of Data Centre Economic Zones with pre-allocated land near IT corridors, and incentives for renewable energy use. The policy also contemplates permanent establishment status for foreign companies leasing extensive capacities, encouraging global investment and partnerships.

State-Level Data Center Policies
Several states including Maharashtra, Karnataka, Telangana, Tamil Nadu, Uttar Pradesh, Rajasthan, West Bengal, and Haryana have introduced comprehensive data center policies offering incentives such as land subsidies (25-50%), stamp duty exemptions, power tariff concessions, building code relaxations, and streamlined single-window approval systems. These policies support industry growth with sustainable infrastructure and green power sourcing commitments.

Data Localization and Regulatory Compliance
With the enactment of the Digital Personal Data Protection Act (DPDP) and sector-specific mandates (e.g., RBI's data localization for financial data), data sovereignty requirements propel domestic data center expansion, fostering a robust local ecosystem.

Sustainability and Skill Development Focus
Government initiatives increasingly emphasize renewable energy use, water conservation, and green certification (such as IGBC's Green Data Center Rating). Training and skill development schemes support a specialized workforce essential for advanced data center operations.

Foreign Direct Investment (FDI) Policies and Industry Coordination
India permits 100% FDI in data centers (with certain country restrictions requiring prior approval) and encourages joint ventures to boost sectoral capacity. The establishment of a Data Center Industry Council facilitates regulatory alignment and industry-government coordination.

Collectively, these policies and initiatives establish a robust and harmonized framework that fosters infrastructure investments, eases operational challenges, prioritizes green energy, and accelerates approvals. These efforts are positioning India as a top global destination for data center investments, promoting scalability, sustainability, technology adoption, and digital economy growth.

Talk to Our Industry Analyst: https://www.marknteladvisors.com/query/talk-to-our-consultant/india-data-center-market.html

(Get personalized insights into company strategies and regional market dynamics.)

Key Growth Catalysts of the India Data Center Market Outlook

Explosive Digital Adoption and Data Consumption

India's booming internet penetration, which grew from 33.4% in 2019 to over 55% by mid-2025, combined with a massive user base exceeding one billion internet subscribers, has led to exponential data consumption. Average monthly data usage per user has nearly tripled from 11.5 GB in 2019 to approximately 32 GB in 2025, driven by video streaming, cloud services, digital payments, and social media engagement. This surge creates insatiable demand for scalable data center infrastructure to support continuous data processing and storage.

Proliferation of 5G and Edge Computing Infrastructure 

The rapid rollout of 5G networks across nearly all districts in India enhances mobile broadband speeds and reduces latency, which is pivotal for data-intensive applications and real-time processing. This accelerates demand for edge data centers strategically located closer to end-users in Tier 2 and Tier 3 cities, enabling use cases like autonomous vehicles, smart cities, and IoT deployments. Edge computing decentralization lowers latency and boosts user experience, creating new opportunities for regional digital growth beyond metropolitan hubs.

Mandated Data Localization and Compliance

India's tightening regulatory environment, including the Digital Personal Data Protection Act and RBI-mandated data localization requirements, compels enterprises and cloud providers to store sensitive data within national borders. This necessity to comply with local data laws is propelling the establishment of localized data centers, especially catering to BFSI, government, and telecom sectors. This regulatory push ensures sustained demand for robust domestic data center capacity.

Sustainability and Renewable Energy Integration

A growing focus on green data centers and sustainability practices is reshaping infrastructure investments. India data center companies are increasingly harnessing solar, wind, and hybrid renewable energy sources, supported by state incentives in Rajasthan, Gujarat, and Karnataka. Advanced cooling technologies like liquid cooling and AI-based energy management optimize power efficiency, helping data centers reduce carbon footprints while managing operational costs.

For instance, Green data center establishments in India:

• CtrlS Data Center Noida and Mumbai solar power initiatives (2024)
  Objective: Reduce carbon emissions and operational costs by meeting major energy needs through solar power integration.
• AdaniConneX and Nxtra hyperscale centers including Visakhapatnam campus (2024–25)
  Objective: Use renewable energy procurement and implement energy-efficient designs to maximize sustainability metrics.
• STT GDC India facilities in Pune and Bengaluru (2024)
  Objective: Lower water and energy consumption using AI-driven cooling management and sustainable water use practices.
• IGBC Green Data Center Certification system launched (2024)
  Objective: Enable construction and operation of data centers with enhanced resource efficiency across energy, water, materials, and environmental quality.
• Equinix and Sify Technologies liquid cooling implementation (2024–25)
  Objective: Reduce cooling energy consumption by up to 30%, improving energy efficiency for high-density AI workloads.

Select a License That Matches Your Business Requirements: https://www.marknteladvisors.com/pricing/india-data-center-market.html

(Access comprehensive insights, regional analysis, and competitive strategies in the industry.)

Robust Venture Capital and Foreign Direct Investments 

The India data center market has attracted massive capital, with investments exceeding USD 14 billion between 2020 and 2025, mainly from global hyperscalers and infrastructure funds. Government incentives on land allotment, affordable power tariffs, and single-window clearances have boosted investor confidence, accelerating facility construction and capacity addition. Strategic partnerships and joint ventures between Indian and global players further fuel expansion.

Expanding Real Estate and Infrastructure Development 

Meeting growing IT load demands requires vast real estate and supporting infrastructure. India's data center real estate is set to grow by over 55 million square feet by 2030, with a significant portion dedicated to large hyperscale campuses exceeding 50 MW capacity. Enhanced connectivity via submarine cables and fiber optic expansion enhances India's role as a regional data transit hub, providing international bandwidth and reducing latency for global clientele.

What Are the Leading Obstacles to Growth in India Data Center Market?

High Setup and Operational Costs: Building and operating data centers in India requires significant upfront investment in land, advanced equipment, energy infrastructure, and cooling systems. These high capital and operational expenses pose barriers to entry and expansion, especially for smaller players.

Infrastructure Gaps and Energy Demands: India faces infrastructure deficits including unreliable power supply and limited fiber connectivity in non-metro and rural areas. Data centers are highly energy-intensive, with cooling systems consuming nearly 40% of energy. Challenges in timely grid expansion, regulatory uncertainties in renewable energy procurement, and environmental sustainability requirements further complicate uninterrupted growth.

These challenges necessitate continued policy support, technological innovation, and investment in green energy and robust connectivity infrastructure to sustain India's rapid data center market expansion.

Leading Companies in India Data Center Market

The competitive landscape features major hyperscale, colocation, and telecom-led companies driving innovation through AI integration, energy efficiency, and regional expansion. Prominent players include:

• CtrlS Datacenters Ltd.,
• Equinix Inc.,
• ESDS Software Solution Ltd.,
• Go4hosting,
• NTT Global Data Centers & Cloud Infrastructure India Private Limited,
• Cisco Systems India Pvt. Ltd.,
• Microsoft Corporation,
• Nxtra Data Ltd.,
• Pi Datacenters Pvt. Ltd.,
• Reliance Communications Ltd. (Reliance Data Centre),
• Adani Group,
• Sify Technologies Ltd.,
• STT GDC Pte Ltd.,
• WebWerks,
• Yotta Infrastructure Solutions,
• Tata Communications, and others

Segmentation Analysis of the India Data Center Market

By Type: Enterprise Data Centers, Colocation Data Centers, Edge Data Centers, Hyperscale Data Center

By Component: Hardware, Software, Services

By Size: Small Data Centers, Mid-Size Data Centers, Large Data Centers

By Tier: Tier 1 and 2, Tier 3, Tier 4

By End User: IT & Telecom, BFSI, Manufacturing, Media & Entertainment, Government, Others

By Region: Bangalore, Chennai, Hyderabad, Mumbai, NCR, Pune, and Rest of India

Cutomization Available - https://www.marknteladvisors.com/query/request-customization/india-data-center-market.html

More Report by MarkNtel Advisors:

US Baby and Children's Clothing Market Research Report: Forecast (2026-2032) - The US Baby and Children's Clothing Market size is valued at around USD 40.21 billion in 2025 and is projected to reach USD 43.92 billion by 2032. Along with this, the market is estimated to grow at a CAGR of around 1.27% during the forecast period, i.e., 2026-32.

India Artificial Jewelry Market Research Report: Forecast (2026-2032) - The India Artificial Jewelry Market size is valued at around USD 4.98 billion in 2025 and is projected to reach USD 9.73 million by 2032. Along with this, the market is estimated to grow at a CAGR of around 10.04% during the forecast period, i.e., 2026-32.

GCC PET Packaging Market Research Report: Forecast (2026- 2032) - The GCC PET Packaging Market is estimated to grow at a CAGR of around 4.5% during the forecast period, i.e., 2026-32.

The US 3D Printed Satellite Market Research Report: Forecast (2023-2028) - The US 3D Printed Satellite Market is expected to grow at a notable CAGR during the forecast period, i.e., 2023-28. 

About Us

MarkNtel Advisors is a globally recognized Industry Research Firm delivering comprehensive market intelligence across diverse sectors, including the Indian market. Our syndicated reports offer in-depth insights into market dynamics, infrastructure investments, technological advancements, regulatory frameworks, and competitive strategies shaping the data center industry landscape.

Leveraging advanced analytics, quantitative modeling, and validated trade and technology data, we empower service providers, investors, real estate developers, and policymakers to navigate evolving digital infrastructure markets and capitalize on growth opportunities. Our expertise spans global as well as regional markets such as India, the United States, and beyond, emphasizing emerging trends like AI integration, green data center initiatives, and the impact of government policies on market expansion. Through specialized consulting, we support our clients in achieving strategic advantage and measurable business growth amid rapid digital transformation and evolving connectivity needs.

Contact Us:
MarkNtel Advisors
Sector 63, Noida, Uttar Pradesh, India
Contact No: +91 87199 99009
Email: [email protected]
Website: https://www.marknteladvisors.com

Logo: https://mma.prnewswire.com/media/2687299/MarkNtel_Advisors_Logo.jpg

SOURCE MarkNtel Advisors