Following a landmark year for data centre investments in 2025, India is poised for even greater expansion and innovation in 2026, with projections indicating a 20% surge in investments. This growth is fueled by an escalating demand for AI infrastructure and the continuous rise of digital transformation across various sectors. The influx of capital is expected to come from both established global firms and burgeoning homegrown companies, collectively pushing India's net available data centre capacity to an impressive 2 gigawatts (GW) by the close of the year.
The Indian data centre market is not just expanding; it's evolving. Valued at approximately USD 6.20 billion in 2025, it is projected to reach USD 16.62 billion by 2035, demonstrating a compound annual growth rate (CAGR) of 10.5% between 2026 and 2035. This robust growth is attributed to several key factors, including the rapid adoption of cloud computing, the proliferation of hyperscale infrastructure, and supportive government policies. The government's push for data localization and emphasis on national data sovereignty are significant drivers, encouraging both global and local enterprises to build data storage and processing capabilities within India.
Several new players are expected to enter the market, intensifying competition and driving innovation. One such company is Yotta Data Services, backed by the Hiranandani Group, which plans to scale up investments to bring nearly 500 MW of AI capacity online in 2026. The growth is not limited to a few major hubs; while Mumbai is expected to retain its leadership position, other regions like Navi Mumbai, Chennai, and even emerging markets such as Visakhapatnam and Pune are anticipated to witness substantial growth. South Indian cities like Bengaluru and Hyderabad are also emerging as key data centre corridors due to strong hyperscale investments and cloud adoption.
This expansion necessitates significant investment in real estate, with approximately 7.3 million square feet required to accommodate the projected growth. Private equity investments in Indian real estate have already surged, reaching $6.7 billion in 2025, a return to pre-pandemic levels, with land parcels and data centres being key attractors. Looking ahead, forecasts suggest private equity investments in Indian real estate will range between $6.5 billion and $7.5 billion in 2026, with data centres continuing to be a focal point for investors.
Furthermore, the rise of 5G networks and the increasing demand for real-time processing are encouraging the deployment of edge data centres closer to end-users. This trend supports applications like autonomous systems and smart city deployments, expanding the data centre market across metropolitan and tier-II/tier-III cities. In addition to capacity, sustainability is also gaining prominence. Data centre operators are increasingly adopting renewable energy sources and advanced cooling technologies to reduce their carbon footprint and manage operational costs. This includes harnessing solar, wind, and hybrid renewable energy sources, supported by state incentives, as well as implementing liquid cooling and AI-based energy management systems.
