India's data centre capacity is projected to grow tenfold by FY35, supported by a $90 billion investment inflow driven by rising AI demand. This expansion shifts the focus toward specialized infrastructure capable of managing power-intensive artificial intelligence workloads.
India is entering a major cycle of infrastructure spending focused on data centres, with total investment estimated to reach nearly $90 billion by the fiscal year 2035. This expansion is largely pushed by the rapid growth of artificial intelligence and high-performance computing, which require more sophisticated and power-heavy facilities compared to traditional cloud setups.
Scaling Infrastructure for AI Workloads
The transformation of the industry is marked by a need for higher rack densities and advanced cooling solutions, such as liquid cooling. Industry data indicates that AI-driven workloads are expected to account for roughly 55% of the country’s total data centre capacity by FY30, climbing to 65% by FY35. A critical investor note here is that much of this capacity will require new construction, as estimates suggest that less than one-third of existing data centre infrastructure can be effectively retrofitted to handle these new, intensive standards.
Construction and Power Opportunities
The construction value chain is emerging as a primary beneficiary of this trend, with a projected $30 billion opportunity by FY30 that could reach $90 billion by FY35. Beyond basic civil construction, significant capital is expected to flow into cooling systems, power distribution, and physical security. Currently, segments like liquid cooling remain highly dependent on imports, which may present a long-term localization opportunity for domestic manufacturers as demand scales.
Capacity Growth and Geographic Trends
India’s installed capacity has seen steady growth, reaching approximately 1.9 gigawatts by FY26, more than tripling the figures recorded in FY19. While Mumbai, Bengaluru, Delhi NCR, and Chennai currently house nearly 90% of this capacity, the sector is gradually expanding into emerging hubs like Hyderabad, Pune, and Visakhapatnam. This geographic diversification is supported by state government incentives and the availability of land, which are vital for large-scale developments.
Market Risks and Monitorables
While the growth trajectory appears robust, investors should account for the capital-intensive nature of the sector. The shift toward AI-ready centres involves higher upfront costs and ongoing power requirements. Potential risks include the execution speed of large-scale infrastructure projects, the ability of power grids to support high-density consumption, and the continued reliance on imported technology for specialized cooling components. The financial viability of these projects will depend heavily on sustained demand from global hyperscale cloud providers and the companies' ability to manage high-debt profiles common in large infrastructure rollouts. Moving forward, the key update to track will be the actual commissioning rate of new facilities versus planned capacity, as well as the ability of domestic suppliers to capture a larger share of the cooling and power infrastructure market.