India’s data centre capacity set to reach 2GW by 2026, backed by $30 billion in investments: Report

India is rapidly positioning itself as a key player in the Asia-Pacific data center landscape, spurred by a booming digital economy, an expanding internet user base, and substantial investments from hyperscale operators. A recent report from Vestian, a Chicago-based firm specializing in workplace solutions, forecasts that India’s data center capacity will soar to between 1.7 to 2.0 gigawatts (GW) by the close of 2026, underpinned by nearly $30 billion in investments. Currently, India operates 164 data centers, placing it behind countries like Italy, Mexico, and Brazil. In stark contrast, the United States dominates the global market with over 5,000 data centers. The report highlights that India’s data center sector, valued at around $10 billion in 2025, is projected to more than double to $22 billion by 2030, showcasing a robust growth potential and increasing confidence from investors. Globally, the data center market is experiencing significant growth, with current installed capacity estimated between 40 to 50 GW and projections suggesting it could exceed 100 GW by 2030. This expansion is being primarily driven by the surge in cloud computing adoption, artificial intelligence, and other data-intensive technologies. In India, this growth is bolstered by a dramatic rise in internet and telecom subscriptions, increased enterprise cloud adoption, and a notable shift toward digital payments and over-the-top (OTT) services. The construction pipeline in India remains strong, with over 700 MW currently in development and an additional 1 to 2 GW in the planning phase. Over the next five to seven years, the country is anticipated to add between 2 to 3 GW of capacity, reflecting sustained demand and absorption rates. The rollout of 5G technology has further intensified data consumption, with average monthly wireless usage surpassing 25 GB per user, highlighting the urgent need for scalable data center infrastructure. Shrinivas Rao, CEO of Vestian, emphasized that "India's data center sector is rapidly evolving due to robust policy support and escalating digital demand. Although its share of global capacity is currently limited, India possesses immense potential to lead in AI infrastructure development. With measures such as single-window clearances, long-term tax exemptions, and additional incentives, India is strategically poised to become a global hub for data centers and AI." The sector has witnessed substantial investor engagement, attracting approximately $13 to $15 billion in investments between 2020 and 2024, with foreign institutional investors accounting for nearly 80% of these inflows. The project pipeline remains promising, with announced ventures worth $60 to $70 billion planned over the next five years, mainly driven by hyperscale platforms and joint ventures. India also benefits from a cost advantage, with construction expenses for data centers ranging from $6 to $7 million per MW, significantly lower than in more developed APAC markets such as Singapore and Japan, making it an attractive destination for large-scale investments. Geographically, data center capacity is primarily concentrated in major metropolitan areas. Mumbai leads with a 49% market share, thanks to its strong global connectivity and infrastructure. Chennai follows with 18%, aided by multiple submarine cable landings that provide high-capacity, low-latency connectivity. Cities like Hyderabad, Bengaluru, and Pune are emerging as vital secondary hubs, supported by robust IT ecosystems and competitive operational costs. Meanwhile, Tier-II cities, including Ahmedabad, Kochi, Jaipur, and Visakhapatnam, are gaining prominence due to better land availability, improving digital infrastructure, supportive state policies, and rising demand from enterprises. Current operational capacity in these regions is estimated at 60 to 80 MW, expected to exceed 100 MW by the end of 2026. Overall, India’s data center market appears set for continuous growth over the next decade as digital transformation accelerates across various sectors.