India's Data Center Capacity to Reach 2,070 MW by End of 2025: CBRE Cumulative investment commitments in the data center sector in India to cross USD 100 billion by 2027. Mumbai, Chennai, and Delhi-NCR to lead data center supply addition

India's data center capacity is projected to reach approximately 2,070 MW by the end of 2025, according to a report titled '2024 India Data Center Market Update' by CBRE South Asia Pvt. Ltd., India's leading real estate consulting firm. India's current data center capacity stands at about 1,255 MW, and it is projected to further expand to around 1,600 MW by the end of 2024.

The country's accelerated technology proliferation, digital transformation, increased internet penetration, policy enablers, and growth in artificial intelligence (AI)-generated data workload will pivot this growth, said CBRE in its report.

One of the key growth drivers identified by the report is the infrastructure status accorded to the data center sector, coupled with the 2020 Draft Data Center Policy, which has fostered a conducive environment for operators and developers. Furthermore, the implementation of the Digital Personal Data Protection Act (DPDPA) in 2023 has facilitated cross-border trade, legitimate data processing, and built stakeholder trust, propelling India's digital innovation ecosystem. Given the current growth curve, it is forecasted that cumulative investment commitments in data centers is likely to surpass USD 100 billion by the end of 2027.

Mumbai continues to dominate data center stock, followed by Chennai, Delhi-NCR, and Bengaluru, accounting for 90 per cent of the country's total data center stock as of September 2024. Currently, India's total data center stock stands at about 19 million sq. ft. (land area), which is expected to reach 31 million sq. ft. by the end of 2025.

The report further added that the sector is poised for significant growth in 2025, with nearly 475 MW of capacity under construction across major cities like Mumbai, Chennai, and Delhi-NCR. Key demand drivers for the year ahead include BFSI and Technology companies.

The report identified state-level policies as a major growth booster for the sector. To foster the growth of the sector, various state governments in India have implemented dedicated policies and incentives. Many states have deemed data centers as 'essential services', underscoring their importance for uninterrupted operations. Maharashtra, Telangana, and Tamil Nadu were pioneers in this regard, releasing state-specific incentives.

Investment Landscape

The data center market in India has experienced substantial investment from global operators, real estate developers, and private equity funds seeking to capitalize on the country's burgeoning market. Between 2019 and 2024, India attracted investment commitments totalling more than USD 60 billion from both domestic and international investors. Maharashtra, Tamil Nadu, Telangana, Uttar Pradesh, and West Bengal emerged as the leading states in terms of cumulative investment commitments. The report anticipates India surpassing USD 100 billion in cumulative investment commitments by the end of 2027.

Anshuman Magazine, Chairman and CEO - India, South-East Asia, Middle East & Africa, CBRE, said, "India's data center market is experiencing unprecedented growth, driven by a combination of rising digital consumption, government initiatives, and significant investments from both domestic and international players. With capacity set to reach 2,070 MW by 2025 and nearly 475 MW currently under construction, India is solidifying its position as a global leader in digital infrastructure. The demand from BFSI, technology, and telecommunications sector, combined with state-level policy incentives, will continue to fuel this growth, making India one of the most attractive destinations for data center operators in the coming years."

Some of the emerging trends in India's data center sector includes entry of tier-II cities, sustainability, and adoption of AI.

Tier-II cities like Ahmedabad, Kochi, Visakhapatnam, and Lucknow are gaining traction as key locations for data centers, driven by regional data consumption growth and cost-efficiency advantages. As sustainability becomes a critical priority, there is a growing focus on integrating renewable energy solutions and advanced cooling technologies, which are helping enhance energy efficiency and reduce the carbon footprint.

For instance, CtrlS Datacenters operates Edge data center facilities in tier-II markets such as Patna and Lucknow, with further expansions planned in these markets along with GIFT City (Ahmedabad), Bhubaneswar and Guwahati. There are plans to set up over 20 edge datacenters in tier-2 and tier-3 markets across India.

"Our strategic expansion into tier-II and tier-III cities, coupled with edge data centers to support low-latency 5G applications, enables localized processing, reducing backhaul traffic and enhancing efficiency," said Vipin Jain, President of Datacenter Operations, CtrlS.

Additionally, with AI workloads expected to surpass traditional cloud computing demands, data center operators are making significant upgrades to their infrastructure to accommodate the evolving needs of AI-driven applications, ensuring they can support the next generation of digital transformation.

"We have developed an AI-based hiring platform that assesses candidates on ten different parameters and based on that, we get the output whether a person should be hired or not. Within a year or so, we may reach a stage where only the system will assess the candidates and release the offer letter as well," said Piyush Somani, Founder, CEO, and CMD, ESDS.