Eight decades after Independence, India is surging forth on its digital transformation journey. With satellites in space, high-capacity data cables in the sea, and AI giga projects being planned across hundreds of acres of land, the South Asian nation is well on its way to shed its “developing economy” tag, and realize its dream of being recognized among developed countries of the world… which is the crux of the Indian government’s Viksit Bharat by 2047 initiative.
In this special feature, we take a closer look at how data centers will play a role in achieving that dream. Industry leaders also weigh in on ground realities such as availability of powered land, access to renewable energy, ease of doing business, as well as policy changes and regulatory support required to bring about meaningful change.
Indian data center market at a glance: What do the numbers say?
According to a recent report by Cushman & Wakefield, India ranks second in Asia Pacific (APAC) markets with 1.6 GW operational capacity. Mumbai features among APAC’s leading primary markets, while Hyderabad ranks ninth globally among secondary markets. “Mumbai anchors India’s position as a primary market in Asia Pacific and continues to play a central role in regional expansion. The city is identified as one of the fastest-growing markets in the region and is expected to surpass 1 GW of operational capacity by the end of 2026,” says the report.
The report also finds that India’s growth is further reinforced by the scale of its long-term expansion pipeline. “Over 10.5 GW of capacity remains at the land stage, reflecting strong future development potential as operators continue to secure sites and prepare for sustained demand,” it says, adding, “At the same time, the market remains structurally underpenetrated, with data center density at approximately 943,000 people per MW, indicating significant headroom for growth. Vacancy has declined to 12.9 percent as of Q4 2025, pointing to continued absorption of new capacity and strengthening demand fundamentals.”
“The global data center sector is moving into a more execution-driven phase of growth, where access to power, infrastructure readiness and delivery capability are becoming as important as demand itself. India is well positioned within this shift given its combination of strong demand visibility, expanding development pipeline, and growing multi-market ecosystem across both primary and emerging locations,” Gautam Saraf, Executive Managing Director, Mumbai & New Business, Cushman & Wakefield said in a press release. “As capacity requirements continue to evolve, markets that can support scalable deployment, reliable infrastructure, and faster execution timelines are expected to see stronger long-term momentum.”
Meanwhile, another recent report by KPMG, finds that in India, “Data centres are also emerging as critical national infrastructure, playing a central role in economic growth, digital sovereignty, and global competitiveness. This momentum is further reinforced by a strong and evolving policy framework that is enabling infrastructure development, AI adoption, and data governance.” It further predicts, “An estimated US$ 90 billion opportunity is expected to emerge by FY35 across the end-to-end data centre value chain, extending well beyond core capacity build-outs into adjacent infrastructure and services.”
Eyes on the prize: What are industry leaders’ priorities?
“India’s datacenter journey has advanced beyond mere adaptation, now actively shaping the next stage of global digital infrastructure. As a homegrown company, our vision is to build infrastructure that is transcending geography and giving enterprises, governments, and citizens confidence that their data and AI workloads are hosted on world-class infrastructure built in India,” says Sridhar Pinnapureddy, Founder & CEO, CtrlS Datacenters. “Digital infrastructure will become as fundamental to India’s growth as highways and power grids. We see our responsibility as building infrastructure designed in India, built for the world, and capable of serving it.”
CtrlS Datacenters was in the news recently for bagging an investment of US$ 739 million from Canada’s CPP Investments. “Our focus over the upcoming year is to strengthen our market leadership in India and make our first prominent move onto the global stage. With the funding from CPP Investments, we are accelerating the development of AI-ready hyperscale capacity across India and expanding our edge infrastructure to support the country’s rapidly changing digital economy,” says Pinnapureddy. But this Indian data center company also has global expansion plans. “Internationally, Thailand marks the start of our expansion into Southeast Asia, where we plan to replicate the engineering excellence, Rated-4 reliability, and disciplined execution that have defined our operations in India over the years.”
Another homegrown player with an interesting mix of digital infrastructure offerings is Techno Digital, the digital infrastructure arm of Techno Electric & Engineering Company Limited (TEECL). Readers would recall that in May 2025, Techno Digital had announced plans to develop hyperscale and edge data centers totaling to 250 MW across India, backed by an ambitious investment plan worth US$ 1 billion. This includes a partnership with RailTel Corporation of India, a public enterprise under India’s Ministry of Railways, to build 102 edge data centers across the country. This project aims to bring low-latency computing closer to users in Tier 2 and Tier 3 cities.
“India’s next phase of digital infrastructure will not be defined by capacity alone, but by how intelligently we distribute it. The country needs an architecture where hyperscale campuses, regional edge infrastructure, power systems and connectivity operate as one integrated ecosystem rather than isolated assets,” explains Ankit Saraiya, Director & CEO, Techno Digital. “We will continue expanding our hyperscale footprint while accelerating the rollout of our edge infrastructure in partnership with RailTel. Chennai will continue to strengthen its position as an AI-ready hyperscale campus, while Noida and Kolkata expand our presence across North and East India. In the coming year specifically, we expect to bring the next phase of our Noida campus and to scale our edge rollout into new regional markets.”
Among global players, CapitaLand has established a presence in the Indian market with data centers in Mumbai, Chennai, Hyderabad, and Bangalore. “India is a conviction market for CapitaLand Investment, not an opportunistic one,” says Surajit Chatterjee, Managing Director & Head, Data Centre, India, CapitaLand Investment. “India has emerged as a focal point for data center investment, driven by cloud adoption, data localization, and the rapid growth of AI-led workloads, and independent estimates suggest capacity across the top cities could cross 4,500 MW by 2030.”
Earlier this year, CapitaLand Investment achieved a first close for the CapitaLand India Data Centre Fund, which targets development opportunities in India’s key data center corridors. Chatterjee continues, “Beyond the established hubs of Mumbai, Chennai and Hyderabad, we are watching emerging corridors in southern and western India where power availability, connectivity and state policy are converging to create credible alternatives for hyperscale and AI workloads.”
Policy push and regulatory support: Make a wish!
India is increasingly showing greater commitment to developing its digital infrastructure, and is also rolling out the red carpet for global players. Earlier this year, while delivering the nation’s budget, India’s Finance Minister Nirmala Sitharaman announced a tax holiday till 2047 for foreign cloud service providers if they use data centers in India to offer services globally. This is subject to these foreign companies also providing services to Indian customers through an Indian reseller. The move aims to attract foreign investment, as well as enable growth of Indian data centers.
And industry leaders give credit where it’s due. “India’s policy direction has been genuinely encouraging, and the last Union Budget took an important step by introducing a long-term income-tax holiday on cloud and data-centre income, extending to 2047 and effectively recognising data centres as essential national infrastructure, alongside power and transportation. That measure removes a major tax friction for global operators and gives the industry the long-term certainty it needs to invest at scale, and it deserves to be acknowledged,” says Saraiya.
“The government deserves credit for recognizing data centers as critical digital infrastructure and for the demand created by Digital India and data localisation,” concurs Chatterjee.
But they all feel we can do better with certain policy changes and regulatory support.
“If I could suggest one change, it would be to regard power policy as a form of digital infrastructure policy. As AI becomes more widespread, access to dependable, 24/7, cost-effective power backed by renewable energy will be crucial for India to expand its digital infrastructure rapidly,” says Pinnapureddy. “While progress has been made through state-level data center policies and quicker approval processes, a more unified national strategy for power infrastructure, transmission capabilities, and stable long-term tariffs would greatly boost investment. Power readiness is now one of the key constraints, and getting this right could position India as a global leader in AI-ready digital infrastructure.”
“If I had one ask, it would be greater harmonization: a genuinely single-window, time-bound clearance framework that works consistently across states, covering land, power and building approvals. Data centers are long-gestation, capital-intensive assets, and predictability of timelines matters as much as incentives,” says Chatterjee. “A close second would be accelerating open access to renewable energy and the transmission infrastructure behind it, so that the industry can green its power at the pace at which capacity is being built. Both would compound India’s existing advantages rather than create new ones,” he adds, much in line with the demands of the wider industry’s concerns surrounding sustainable development.
Meanwhile, Saraiya sheds light on another huge problem plaguing the data center sector. “If I were to add one further reform, it would be relief on the customs duty and GST levied on the import of GPUs. AI compute today runs almost entirely on imported accelerators, yet these GPUs attract basic customs duty and an upfront 18 percent GST that together add materially to the cost of building AI capacity. Reducing or exempting the import duty on AI accelerators, and easing the GST burden on them, would directly lower the cost of domestic AI infrastructure and accelerate the build-out of sovereign compute at exactly the moment the country is racing to establish it.”
Conclusion
In conclusion, while India’s digital infrastructure industry is developing at an unprecedented pace, data center owners and operators are exercising cautious optimism, and hoping for more meaningful policy reforms so that India can achieve its true potential.