India’s data center industry is undergoing rapid transformation, driven by increased internet penetration, rising data consumption, and the adoption of advanced technologies like AI, cloud computing, and IoT. With significant investments and government support, India is poised to become a global hub for data centers by 2030.

1. Current Market Size and Growth Projections

Market Size (2024–2033)

• The Indian data center market was valued at USD 5.03 billion in 2024.
• It is projected to grow to USD 12.85 billion by 2033, at a CAGR of 10.43% during 2025–2033.

Capacity Growth

• India’s current data center capacity (2024): 1.4 GW
• Under construction: 1.03 GW.
• Planned expansions: 1.29 GW.
• Total capacity by 2028: 3.29 GW.

Colocation Revenue

• Colocation services are expected to generate revenue of:
• USD 2.34 billion in 2025.
• Growing to USD 4.93 billion by 2030, at a CAGR of 16.10% (2025–2030).

2. Key Drivers of Growth

 A. Rising Internet Penetration

• India had an internet user base of 751.5 million in early 2024, with an internet penetration rate of  52.4%.
• By 2025, active internet users are projected to reach 900 million, driven by rural adoption and regional language content.

B. Data Consumption Surge

• Average monthly data consumption per user:
• Grew from 11 GB in 2019 to over 21 GB in 2024.
• Expected to rise further due to OTT platforms, gaming, and IoT devices.

C. Adoption of Cloud Computing

• Cloud computing is expected to contribute up to 8% of India’s GDP by 2026, creating significant demand for data center infrastructure.

D. Government Support

• The Indian government has committed ₹10,732 crore (~USD 1.24 billion) toward AI infrastructure development.
• Renewable energy initiatives aim for sustainable power solutions for future data centers:
• Renewables will contribute up to 61% of India’s power capacity by 2030.

3. Investment Landscape

A. Total Investments

• India’s data center industry has attracted over:
• USD 6.5 billion in investments between 2014–2024, through private equity deals, joint ventures, and acquisitions.

B. Major Players

Key players driving growth include:

• AdaniConneX : Developing six mega-size projects across India.
• STT Telemedia: Operates multiple Tier III-certified facilities across states.
• Yotta Infrastructure: Expanding its footprint with hyperscale facilities.

4. Regional Insights

Dominant Markets

1. Mumbai:

• Accounts for nearly half (49%) of India’s total IT power capacity.
• Strategic location for submarine cable connectivity makes it the leader in the market.

2. Chennai:

• Contributes significantly due to its proximity to submarine cable landing stations.

Emerging Markets

• Expansion into Tier II cities like Pune, Hyderabad, and Bengaluru offers untapped potential due to lower operational costs and increasing demand for edge computing.

5. Challenges and Opportunities

Challenges

• High energy consumption remains a concern; however, renewable energy integration offers a viable solution.
• Regulatory hurdles related to land acquisition and infrastructure development slow down expansion efforts.

Opportunities

• Expansion into Tier II cities provides cost advantages (e.g., lower real estate costs).
• Integration of advanced technologies like liquid cooling systems can enhance efficiency while reducing environmental impact.

Conclusion

India’s data center industry is on the cusp of transformation, fueled by digital adoption and robust investments from both private players and the government:

• With its strategic focus on sustainability (e.g., renewable energy integration) and innovation (e.g., AI-driven infrastructure), India is well-positioned as a global leader in the data center space by the end of this decade.
• Investments in Tier II cities will further decentralize growth while ensuring accessibility across regions.

By leveraging these opportunities effectively, India can establish itself as a global hub for digital infrastructure while meeting sustainability goals.