India’s data centre sector is slated for significant expansion, with projections indicating that its capacity will exceed 1,800 megawatts by the close of 2026. A report by real estate consultancy CBRE South Asia noted this growth, revealing that the country currently leads the Asia-Pacific region (excluding China) in data centre capacity at about 950 megawatts.
The report highlighted India’s appeal to both global and domestic investors, with investment commitments exceeding USD 40 billion between 2018 and 2023. This influx of capital reflects the country’s favourable market conditions and its ability to attract multinational corporations (MNCs) seeking to expand their digital services and address supply constraints in other Asian markets.
Key sectors driving the demand for data centre services include banking, financial services, and insurance (BFSI), technology firms and cloud service providers. The report predicted sustained growth in these sectors, prompting exploration of alternative solutions such as colocation and hyperscale facilities.
While Mumbai and Chennai currently dominate India’s data centre landscape, accounting for approximately 68 per cent of the total stock, Tier 2 cities such as Kochi, Jaipur, Ahmedabad, Lucknow, Patna and Visakhapatnam are emerging as significant markets.
Investments are flowing into the sector from various quarters, including global operators, real estate developers, private equity funds and domestic players. Anant Raj Limited, for instance, has announced plans to invest over Rs 10,000 crore in developing a 307-megawatt data centre across three locations.
India’s appeal to global hyperscalers for expansion is also evident, with many opting for custom-built facilities. In 2023, more than 85 per cent of the USD 27 billion committed investment targeted the development of hyperscale facilities.
Looking ahead, merger and acquisition (M&A) activity among data centre operators is expected to increase to mitigate market fragmentation and capitalise on the growing demand for data services in the region.
