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India's data centre capacity is projected to reach 12 GW by 2030, up sharply from 2.2 GW in 2025, according to Wood Mackenzie.
Artificial intelligence is expected to be a major driver of that expansion, with AI-dedicated capacity rising from 275 MW to 6,546 MW over the same period. That would mark an almost 24-fold increase as cloud providers, enterprise technology spending and AI workloads lift demand for computing infrastructure.
Wood Mackenzie's assessment places India among the faster-growing data centre markets in Asia-Pacific. The country's digital economy, valued at INR32 trillion in 2025 and representing about 12% of GDP, is creating sustained demand for new digital infrastructure.
More than 1.03 billion active internet users and roughly 22 billion Unified Payments Interface transactions each month are adding to the pressure on capacity. The domestic AI market is also projected to reach INR11.7 trillion by 2032, creating another source of demand for data centres.
Electricity use is set to be one of the defining features of that growth. Data centre electricity demand in India is forecast to climb from 10 TWh in 2025 to 191 TWh by 2040, a 20-fold increase that would leave the sector accounting for 7% of total power demand.
That rising power requirement is reshaping where projects are built and how developers plan them. Access to reliable, cost-competitive electricity has overtaken land and capital as the main constraint on development.
Regional shift
Maharashtra and Tamil Nadu currently account for about 65% of installed IT load, but the next wave of investment is expected to be more widely distributed. Andhra Pradesh, Telangana, Uttar Pradesh and Karnataka are also attracting commitments as operators and investors look beyond established hubs.
Global technology groups including Amazon Web Services and Google are expanding in the market alongside domestic operators. AdaniConnex has announced a development pipeline of 2.6 GW, underscoring the scale of planned capacity.
The report includes a Hub Attractiveness Index that compares India's data centre markets using factors such as power economics, sustainability, infrastructure and policy support. It reflects a market where site selection is increasingly shaped by operating conditions rather than land access alone.
"India's data centre market becomes a structural investment thesis," said Souhardya Pal, Research Associate, Wood Mackenzie.
"The convergence of hyperscale capital, AI workload growth and a decade of policy support have created the conditions for India to rival any market in Asia-Pacific. The question for developers and investors is no longer whether to enter India, but where and how," said Pal.
Power focus
Developers are turning to captive generation and long-term renewable power purchase agreements to manage both cost and supply. States with more liberal open-access rules and competitive intra-state transmission charges are emerging as preferred locations for new builds.
Those considerations are becoming more important because large facilities need steady, round-the-clock power at specific grid nodes. In practice, that means energy procurement strategy is becoming central to investment decisions from the start of a project.
Water is another pressure point. The report identified water availability as one of the sector's more overlooked risks, particularly as AI workloads increase rack densities and cooling needs.
Water-stressed markets such as Tamil Nadu and Karnataka could face greater scrutiny as data centre demand rises. According to the findings, developers using closed-loop cooling systems and zero liquid discharge technologies are already reducing freshwater use.
Wood Mackenzie said long-term success in the market will depend on balancing digital demand with infrastructure resilience. Reliable power access, water management and state-level policy conditions are expected to play a larger role as the market expands.
"Land and capital are no longer the limiting factors for data centre developers in India. What determines site selection and delivery timelines now is access to firm, round-the-clock power at the node level," said Dr. Rashika Gupta, Vice President of Research, Wood Mackenzie.
"Developers who secure their power strategy early through captive generation or long-term renewable PPAs will lock in a structural cost and sustainability advantage for the life of their assets," said Gupta.