India's data center market is experiencing a significant boom, fueled by the increasing demand for data storage and processing capabilities, largely driven by the rise of artificial intelligence (AI). This surge in demand is prompting data center companies to explore initial public offerings (IPOs) to fund further expansion and capitalize on the growing market.
Market Growth and Investment
The Indian data center market is currently valued at approximately $10.48 billion in 2025 and is projected to reach $27.2 billion by 2032, exhibiting a compound annual growth rate (CAGR) of around 14.60%. This rapid growth is attributed to the increasing digitalization of enterprises, the rising demand for cloud-based services, and government-led infrastructure modernization. Investment in the sector since 2020 has reached nearly $15 billion, with expectations of an additional $20-25 billion in capital inflows over the next six years. The country's data center capacity is expected to more than double by fiscal year 2027, reaching 2-2.3 GW. By 2030, data center capacity is projected to reach 5 GW, with a capital expenditure crossing $22 billion.
AI's Influence on Data Center Growth
The proliferation of AI technologies, including machine learning (ML), deep learning, and natural language processing (NLP), is generating unprecedented amounts of data, necessitating increased storage and computational capabilities. AI-driven applications across sectors like healthcare, fintech, logistics, and e-commerce are driving the demand for scalable, high-performance computing infrastructure. AI is also transforming data center management by enabling real-time monitoring, predictive maintenance, and efficient energy management, leading to reduced operational costs and lower carbon emissions.
IPOs as a Funding Avenue
Several data center companies are looking to tap the capital markets through IPOs to fund their expansion plans. Sify Infinit Spaces has already filed draft papers with SEBI to launch an IPO to raise INR 3,700 crore. The IPO includes a fresh issue of shares worth Rs 2,500 crore and an offer for sale of shares worth INR 1,200 crore by existing investors. The company intends to use the proceeds to expand its data centers in Mumbai and Chennai.
Yotta Data Services, another major player in the Indian data center market, initially planned to list on the Nasdaq through a merger with a special purpose acquisition company (SPAC). However, the company is now pursuing a domestic stock market listing. The listing is expected to raise around $463 million, which will be used primarily for expanding Graphics Processing Unit (GPU) infrastructure.
Challenges and Opportunities
While the Indian data center market presents significant opportunities, it also faces certain challenges. One of the key challenges is the need for reliable and sustainable power. Data centers consume vast amounts of electricity, and operators are increasingly looking at renewable energy sources and advanced cooling technologies to reduce their environmental impact. Another challenge is ensuring data security and compliance with data localization regulations. Despite these challenges, the Indian data center market is poised for continued growth, driven by the increasing demand for data and the growing adoption of AI. The government's support for digitalization and infrastructure modernization is also expected to further boost the market. As India's AI market is expected to reach US$20–22 billion by 2027, posting a CAGR of 30 percent, the demand for robust data center infrastructure will only continue to rise.
