India is currently experiencing a significant boom in its data center industry, driven by increasing digital consumption, the rise of artificial intelligence (AI), and supportive government policies. This surge is transforming India into a major global data center hub, attracting substantial investments and creating new opportunities.
Several factors are fueling this expansion. Firstly, there's been a massive increase in data consumption, propelled by the growing popularity of OTT platforms, digital payments, social media, and e-commerce. Data consumption in India has skyrocketed from 8 exabytes in FY17 to 229 exabytes in FY25. Secondly, the increasing adoption of AI, cloud computing, big data, and the Internet of Things (IoT) necessitates robust data center infrastructure. The demand for specialized data centers is rising, particularly those capable of handling the intensive computing power required for AI applications. Thirdly, the government's push for digital transformation and data localization is encouraging both domestic and international players to invest in Indian data centers.
Investments in the sector are soaring. Over $30 billion has already been poured into the Indian data center market, with projections indicating that global hyperscalers and Indian conglomerates will invest over $50 billion in the next five to seven years. These investments are expected to increase India's total data center capacity from approximately 1 GW to 9 GW. Adani Group, for instance, plans to invest up to $5 billion in Google's India AI data center project. Google itself has committed to investing $15 billion over the next five years to establish an AI data center in Andhra Pradesh. TCS is also securing investments to scale up its AI-data center platform.
Mumbai is emerging as a particularly attractive location for data center development due to its relatively low construction costs. According to the Turner & Townsend Data Centre Construction Cost Index, Mumbai has the second-lowest data center construction costs globally in 2025, at just $6.64 per watt. This cost advantage positions Mumbai as a competitive destination compared to other major hubs like Tokyo, Singapore, and Zurich. The highest investment traction has been recorded in Maharashtra, Telangana, Karnataka, Tamil Nadu, and West Bengal.
The data center boom is also driving innovation and sustainability in the industry. Data centers are increasingly exploring renewable energy sources to reduce their carbon footprint and enhance energy efficiency. Furthermore, advancements in cooling technologies and data center design are helping to optimize resource utilization and minimize environmental impact.
The growth of India's data center industry is not without its challenges. Ensuring reliable power supply, acquiring land, and navigating regulatory hurdles remain key considerations for developers. However, the long-term outlook for the sector remains exceptionally positive, with data center operator revenue expected to reach ₹20,000 crore by FY28. As India continues its digital transformation journey, the data center industry will play a crucial role in supporting economic growth and enabling the country to become a global digital powerhouse.
