India’s Data Centre Capacity Set to Reach 9 GW by 2032 | 04 Nov 2025

Source: ET

Why in News?

India’s data centre industry is projected to expand significantly, with capacity expected to increase from 1.2 GW in 2025 to 9 GW by 2032, registering a compound annual growth rate (CAGR) of 17%.

What are Data Centres? 

• About: 
  • Data centres are specialised facilities that store, manage, and process large volumes of electronic data. 
  • They house critical Information Technology (IT) infrastructure, including servers, storage devices, networking equipment, and systems for cooling, power supply, and security.
  • These centres are designed to offer reliable, scalable, and secure environments for managing data essential to modern digital operations-ranging from cloud computing to artificial intelligence applications.
• Market Size and Growth: Despite producing 20% of the world’s data, India currently holds only 3% of global data centre capacity, highlighting vast potential for expansion.
• Geographical Distribution: India currently hosts around 150 data centres, with major players such as Amazon Web Services (AWS), Microsoft Azure, Google Cloud, etc. leading the market.
  • Mumbai accounts for over 50% of India’s data centre, and emerging hubs include Ahmedabad, Pune, and Visakhapatnam (Vizag).

What are Key Reasons Behind the Growth Of Data Centres in India?

• Expanding Digital Infrastructure: With 751 million internet users and 52.4% penetration in 2024, India’s growing digital ecosystem is driving massive demand for data generation, storage, and processing facilities.
• AI, 5G, and IoT Growth: Rapid expansion of AI applications, generative models, and 5G networks is expected to triple data consumption, necessitating faster and more efficient data centres.
• Edge Computing: Rising use of IoT and 5G has boosted demand for edge data centres that process data closer to users, reducing latency and improving real-time efficiency.
• Economic and Employment Impact: The sector could generate over ₹50,000 crore in economic activity by FY27, spurring investments, job creation, and real estate growth (Crisil Ratings).
• Policy and Data Localisation: Laws like the Public Records Act (1993), RBI’s 2018 directive, and the Digital Personal Data Protection Act (2023) mandate local data storage to safeguard privacy and national interests.
• National Sovereignty: Domestic data storage enhances India’s control over sensitive information, strengthening digital security and strategic autonomy.

What are the Key Challenges in Establishing a Data Centre in India?

• Infrastructure and Regional Gaps:  India’s data centre expansion is hindered by unreliable power supply, poor connectivity, and high operational costs.
  • Limited undersea cables controlled by foreign entities create dependency. High cooling needs in hot climates further raise costs, and metros like Mumbai dominate due to inadequate infrastructure in smaller cities.
• Environmental Sustainability: The sector’s rapid growth poses major environmental concerns due to high energy and water consumption.
  • Data centres used 1.5% of global electricity in 2024, projected to reach 3% by 2030. India’s coal-based grid increases carbon emissions, while water-intensive cooling systems strain resources in drought-prone areas.
• Skill and Security Challenges: A shortage of trained professionals and rising cyber threats endanger operational reliability. 
  • Large data centres are prime targets for cyberattacks and physical sabotage, highlighting the need for stronger cybersecurity and workforce development.
• Global Competition and Trade Risks: India faces strong competition from countries with advanced data ecosystems like China and Singapore.
  • Stringent localisation norms could lead to reciprocal trade barriers against Indian IT firms, raise service costs, and reduce competition, potentially inviting WTO disputes.
• High Capital Investment: The sector requires massive financial commitments with uncertain returns.
  • Building 40 GW of data centre capacity by 2030 needs around USD 400 billion, but long payback periods of 10–15 years may deter investors and increase consumer costs.

What Steps can be taken to Address Challenges Related to Data Centres in India?

• Infrastructure Upgradation: Invest in reliable, low-cost, and renewable power infrastructure by offering subsidized electricity tariffs and enabling direct power procurement from DISCOMs or renewable sources like solar and wind.
• Policy Refinement: Simplify land acquisition and approval processes while offering incentives such as tax breaks for firms storing data in India and promoting green data centers with liquid cooling and energy-efficient designs.
• Regional Diversification: Establish dedicated data center zones in Tier-2 and Tier-3 cities, particularly in cooler regions like Shimla, Dehradun, and Chandigarh, to reduce cooling costs and promote balanced regional growth.
• Human Resource Development: Launch a National Data Center Academy to train professionals in AI, cloud computing, and cybersecurity, supported by collaborations with global technology companies.
• Sustainable Practices: Encourage green and energy-efficient technologies, expand undersea cable stations, and build a National Fiber Corridor to ensure connectivity and sustainability in data infrastructure.

Conclusion

India stands at the cusp of becoming a global data centre powerhouse, driven by its expanding digital economy, rapid AI integration, and 5G rollout. However, addressing challenges related to infrastructure, sustainability, and skill development remains crucial. With supportive government policies and sustained investment, India can emerge as a leading “Data Nation” by 2032, strengthening its position in the global digital ecosystem.