India’s data centre market is projected to expand significantly, reaching over 101 million sq ft by 2030 with $300 billion in investment commitments. While AI and data localization drive this growth, investors may watch for risks related to grid stability, rising energy costs, and climate-related infrastructure challenges.
India is on track to expand its data centre footprint to over 101 million square feet by 2030. This growth, moving from 27 million square feet in early 2026, reflects the country's shift toward digital infrastructure. Market projections suggest that total capacity will rise from approximately 1.8 gigawatts (GW) to over 6.7 GW by the end of the decade.
This demand is driven by the rapid adoption of artificial intelligence (AI), 5G networks, and rising digital payments. The Digital Personal Data Protection Act, 2023, has also played a role by requiring companies to store data domestically, which increases the need for secure local infrastructure.
Investment commitments in the sector have reached approximately $300 billion. Government support has been a key factor, with infrastructure status allowing companies to access long-term financing at interest rates ranging between 9.5% and 10.5% for tenures up to 12 years. Furthermore, the Union Budget 2026-27 introduced a tax holiday for eligible global cloud service providers to boost India's competitiveness as a regional storage hub.
Mumbai remains the primary data centre hub due to its established commercial and financial ecosystem. However, other cities such as Chennai, Bengaluru, Delhi-NCR, and Hyderabad are emerging as critical locations as companies look to diversify their infrastructure across different regions.
While the growth outlook is significant, investors should account for operational risks. Data centres are energy-intensive, and their expansion faces potential power grid stability issues if supply cannot keep up with demand. Climate change also presents a threat, as physical assets in states like Tamil Nadu, Karnataka, and Telangana are vulnerable to extreme weather events such as floods and intense heat, which can disrupt operations.
Additionally, rising setup costs and high capital requirements mean that companies in this sector face pressure on their cash flows and margins. The financial viability of these projects will depend on high utilization rates and efficient power management. Investors may track the actual commissioning timelines of new capacity and monitor how companies manage their debt levels against these large, long-term capital expenditures.