According to a report by Wood Mackenzie, India’s data centre market is entering a structural growth phase that positions the country as one of Asia-Pacific’s most attractive infrastructure investment opportunities.
The report forecasted India’s operational data centre capacity will increase from 2.2 gigawatt (GW) in 2025 to 12 GW by 2030, making a compound annual growth rate (CAGR) of approximately 40 per cent. Artificial intelligence (AI)-dedicated capacity is expected to expand nearly 24-fold over the same period, rising from 275 megawatts (MW) to 6,546 MW, as hyperscale cloud providers, enterprise digitalisation and artificial intelligence accelerate demand for compute infrastructure.
According to Wood Mackenzie, data centre electricity demand is forecast to grow 20-fold by 2040 from 10 TWh in 2025 and would account for 7 per cent of the total electricity demand.
While Maharashtra and Tamil Nadu currently account for around 65 per cent of installed IT load, Wood Mackenzie expects the next phase of investment to also expand across Andhra Pradesh, Telangana, Uttar Pradesh and Karnataka. These emerging markets are attracting significant commitments from global hyperscalers, including Amazon Web Services and Google, alongside domestic operators such as AdaniConnex, which has announced a development pipeline of 2.6 GW.
The report featured a detailed hub attractiveness index that benchmarks India’s data centre markets against a range of investment and operational criteria, including power economics, sustainability considerations, infrastructure ecosystem, and policy support. The findings offer stakeholders a data-driven perspective on the evolving landscape of data centre development in India.
The report found that reliable, cost-competitive power has become the defining factor in data centre development, overtaking land and capital as the industry’s primary constraint. Captive generation and long-term renewable power purchase agreements (PPAs) are becoming the preferred procurement strategies, enabling developers to reduce operating costs while supporting corporate decarbonisation goals. States with liberalised open-access frameworks and competitive intra-state transmission charges are positioning themselves as preferred hubs for new capacity, as power procurement strategy increasingly determines site selection
Land and capital are no longer the limiting factors for data centre developers in India. What determines site selection and delivery timelines now is access to firm, round-the-clock power at the node level.
The report also identified water availability as one of the sector’s most underappreciated investment risks. As AI workloads increase rack densities and cooling requirements, water access is becoming an increasingly important site selection criterion, particularly in water-stressed markets such as Tamil Nadu and Karnataka.
Wood Mackenzie noted that developers adopting closed-loop cooling systems and zero liquid discharge technologies are already reducing freshwater consumption and positioning themselves ahead of potential future regulation.
The report concluded that India’s combination of strong digital demand, supportive policy, expanding renewable energy markets and accelerating AI adoption is creating one of the world’s fastest-growing data centre markets. However, long-term success will increasingly depend on developers’ ability to secure reliable power, manage water resources and select locations that balance growth potential with infrastructure resilience.
Commenting on the report, research associate, Wood Mackenzie, said, “India’s data centre market becomes a structural investment thesis. The convergence of hyperscale capital, AI workload growth and a decade of policy support have created the conditions for India to rival any market in Asia-Pacific. The question for developers and investors is no longer whether to enter India, but where and how.”
Meanwhile, vice president of research, Wood Mackenzie, said, “Land and capital are no longer the limiting factors for data centre developers in India. What determines site selection and delivery timelines now is access to firm, round-the-clock power at the node level. Developers who secure their power strategy early through captive generation or long-term renewable PPAs, will lock in a structural cost and sustainability advantage for the life of their assets.”