Data Centre Capacity in India, Government Initiatives, Significance

Data centre capacity in India has increased from approximately 375 MW in 2020 to 1,500 MW by 2025, highlighting growing demand for data storage, high-performance computing, and AI-enabled infrastructure.

What are Data Centres?

Data centres are specialised facilities that store, manage, and process large volumes of electronic data. They house servers, storage, networking, power, and cooling systems to ensure secure, scalable, and reliable digital operations. 

Despite generating 20% of global data, India currently holds only 3% of global data centre capacity, highlighting immense growth potential. Major centres are located in Mumbai, Bengaluru, Hyderabad, Noida, Chennai, and Visakhapatnam, with emerging hubs in Ahmedabad, Pune, and Vizag.

Drivers of Growth of Data Centres 

The growth of data centre capacity in India is driven by technology adoption, policy support, government initiatives, and economic potential.

• Digital and AI Expansion: Growing internet penetration (751 million users, 52.4% in 2024), AI, 5G, and IoT are driving higher data consumption, necessitating faster, high-performance infrastructure.
• Policy Support & Data Localisation: Laws such as the Digital Personal Data Protection Act and RBI directives mandate local storage, boosting domestic demand.
• Government Initiatives: Programs like Digital India, NIC-operated data centres, infrastructure status for centres above 5 MW, and state-level policies (e.g., Maharashtra IT & ITES Policy 2023) provide incentives and ease investment.
• Economic Impact: The sector could generate over ₹50,000 crore in economic activity by FY27, creating jobs and boosting real estate.

‹ ›

Government Initiatives for Data Centres in India

The Government of India has undertaken multiple initiatives to strengthen the data centre capacity in India and support the country’s digital and AI-driven economy:

• AI Compute Capacity Framework
  • The government has onboarded 38,231 GPUs through 14 empanelled service providers and data centres, making them available at a subsidised rate of ₹65 per hour, roughly one-third of the global average, to startups, researchers, and academic institutions. 
  • This measure directly enhances the data centre capacity in India and makes high-performance computing accessible at globally competitive costs.
• Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act
  • The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act facilitates the deployment of small modular and micro nuclear reactors, ensuring reliable and sustainable power supply for data centres and AI workloads, supporting the growth of data centre capacity in India.
• Electricity Infrastructure Planning
  • With electricity demand from data centres expected to reach 13.56 GW by 2031–32, the government is upgrading India’s national transmission network and enabling direct power procurement from renewable sources to provide uninterrupted power for expanding data centre capacity in India.
• Sustainable Water Usage Guidelines
  • Data centres in India use large amounts of water, roughly 24–30 litres per kWh of IT load, mainly for cooling servers and AI equipment.
  • The government promotes advanced cooling technologies such as direct-to-chip liquid cooling, adiabatic cooling, and immersion cooling, as well as deployment of high-density racks to minimise water and electricity use while ensuring efficient and reliable operation.

Data Centre Capacity in India Significance

The expansion of data centre capacity in India is crucial for supporting the country’s digital economy, enhancing technological capabilities, and ensuring secure and efficient management of growing data volumes

• Provide backbone infrastructure for cloud computing, AI, and high-performance computing.
• Support secure, scalable, and efficient storage and processing of rapidly growing data.
• Enhance digital sovereignty through domestic data storage in line with data localisation policies.
• Enable technological innovation by supporting startups, research, and AI applications.
• Strengthen national security and strategic autonomy by protecting sensitive information domestically.

Challenges in Expanding Data Centre Capacity in India

Despite rapid growth, the expansion of data centre capacity in India faces several structural, environmental, and operational challenges that could constrain its potential.

• Infrastructure & Regional Gaps: Expansion of data centre capacity in India is constrained by unreliable power supply, limited connectivity, and concentration in metro cities, which increases operational and setup costs.
• Environmental Sustainability: Data centres consume high amounts of electricity and water, and reliance on India’s coal-based grid increases carbon emissions, posing sustainability challenges for growing data centre capacity in India.
• Skill & Security Shortages: A shortage of trained professionals and rising cyber threats affect reliable operations, limiting the growth of data centre capacity in India.
• High Capital Investment: Large upfront costs and long payback periods make investment in data centre capacity in India challenging and can slow sector growth.

Way Forward to Enhance Data Centre Capacity in India

To ensure sustainable growth and global competitiveness, the expansion of data centre capacity in India requires strategic interventions across infrastructure, policy, regional planning, human resources, and environmental management.

• Infrastructure Upgrade: Invest in renewable energy, expand undersea data cables, and develop a National Fiber Corridor to support reliable and scalable data centre capacity in India.
• Policy & Regulatory Support: Simplify approvals, offer tax incentives, and promote green data centres to encourage sustainable growth of data centre capacity in India.
• Regional Diversification: Establish data centres in cooler Tier-2 and Tier-3 cities like Shimla, Dehradun, and Chandigarh to reduce cooling costs and promote balanced development.
• Human Capital Development: Launch training programs in AI, cloud computing, and cybersecurity to build skilled manpower supporting data centre capacity in India.
• Sustainable Practices: Encourage adoption of advanced cooling technologies, water recycling, and energy-efficient designs to ensure eco-friendly and cost-efficient expansion of data centre capacity in India.