India’s data centre (DC) industry in 2024 reached a pivotal moment, reflecting both the velocity of the country's digital transformation and its ambitions to become a $1 trillion digital economy by 2027–28. The crossing of the 1 gigawatt (GW) mark in total data centre capacity this year signals more than just expansion-it marks the shift to a future where data sovereignty, artificial intelligence (AI), next-gen hardware, and regulatory frameworks converge to redefine how India processes, protects, and powers its data.
From sovereign cloud initiatives and AI-ready infrastructure to the widespread adoption of liquid cooling and edge computing, India’s DC market is undergoing a rapid metamorphosis. With a sharp year-on-year growth in capacity absorption and pre-commitments for AI workloads surging, the country’s data centre landscape is preparing to meet both global expectations and domestic digital ambitions.

The Market in Numbers: Capacity Growth and Demand Trends
India’s total colocation data centre capacity stood at 1,030 megawatts (MW) by H1 2024, an increase of nearly 54% in just two years from the 668 MW recorded in H1 2022. Of this, 993 MW is already live. The country recorded 122 MW of absorption in the first half of the year, a 51% year-on-year growth. Mumbai alone accounted for 46% of the absorption in H1 2024, followed by Chennai at 19% and Noida at 15%.
With nearly 68% of the absorption attributed to hyperscalers and cloud providers, the scale of pre-leasing indicates not just current growth but sustained demand for future-ready capacity. The industry is now preparing to add approximately 785 MW of new capacity between 2024 and 2027, which will require more than 9.3 million sq. ft of real estate and a cumulative investment of around USD 5 billion.
The demand drivers are diverse: AI deployments, digitization across industries, smart city initiatives, and the increasing popularity of streaming services and gaming platforms have all contributed to the need for scalable, secure, and highly connected data infrastructure. Data consumption in India is projected to exceed 25 GB per user per month by the end of 2024, further emphasizing the growing pressure on backend data infrastructure.

The  AI  Catalyst: Infrastructure Transformation
The rapid evolution of AI and machine learning technologies is a defining feature of the infrastructure upgrades witnessed in 2024. Modern GPUs designed for AI workloads consume three times more power than traditional CPUs and generate heat densities that are unsustainable for legacy air-cooling systems. This year, multiple colocation providers reported client requests for rack densities in excess of 40 kW, especially for GPU-heavy workloads such as LLM training.
Training times for AI models have also drastically reduced-what took 32 hours in 2019 can now be achieved in just one second. This exponential leap in performance has heightened the urgency for infrastructure that can sustain AI deployment at scale.
Consequently, data centre design has seen a marked shift towards high-density racks, liquid cooling technologies, and modular power distribution systems. Players like Yotta, STT GDC, and Web Werks are already deploying high-density-ready floors in new builds, reflecting this urgent pivot.
AI-driven demand is expected to account for over 30% of new data centre pre-leasing in the coming year, with LLM training and inference infrastructure becoming an integral part of facility planning and load distribution strategies.

Liquid Cooling: The New Normal for AI-Era Data Centres
Traditional air-based cooling systems are proving insufficient for the power profiles of new AI hardware. Liquid cooling, which offers up to 70% energy efficiency in hybrid systems, has gained rapid acceptance across new builds and retrofits.
India is gradually moving towards mainstreaming solutions such as direct-to-chip (DTC) cooling, rear-door heat exchangers (RDHx), and immersive liquid cooling. These technologies enable rack densities to scale beyond 50 kW, a threshold necessary for supporting future AI workloads.
Major providers are now building floors specifically optimized for liquid cooling deployment. This year, over 25% of new capacity in Mumbai and Chennai is being constructed with native support for hybrid or full-liquid cooling configurations.
The Bureau of Energy Efficiency (BEE) and Ministry of Power are also in discussions to establish guidelines for energy-efficient cooling in data centres, which could accelerate adoption further in 2025.

NeoCloud and the Edge Computing Revolution
As latency-sensitive use cases such as IoT, AR/VR, and autonomous vehicles gain traction, India is witnessing the rise of NeoCloud architectures. These architectures distribute compute closer to users, enhancing performance and reliability. The emergence of tier-2 and tier-3 city data centres is a clear sign of this transition.
Edge data centres are now being planned or deployed in cities like Indore, Lucknow, Jaipur, and Visakhapatnam. These facilities are typically 1–5 MW in capacity and are being integrated into broader hyperscale ecosystems to ensure seamless workload migration and disaster recovery.
In 2024, the total edge capacity in India surpassed 100 MW for the first time, with more than 30 new edge sites under development. The shift toward distributed computing models is no longer speculative-it’s foundational.
Additionally, global CDNs and telcos are partnering with Indian operators to deploy micro data centres near mobile switching hubs to support 5G rollouts and content caching for real-time video, gaming, and cloud applications.

Policy Push: Data Sovereignty and the DPDP Act
The passage of the Digital Personal Data Protection (DPDP) Act in 2023 has had a ripple effect across the data centre ecosystem in 2024. The Act mandates specific responsibilities for data fiduciaries and processors, emphasizing localization, consent architecture, and the protection of sensitive information.
To comply with the DPDP Act, hyperscalers and global platforms are increasingly turning to Indian colocation providers for compliant infrastructure. Mumbai, Pune, and Noida have emerged as preferred destinations for such projects due to their strong policy environments, proximity to submarine cable landings, and state-level digital policies.
India’s sovereign cloud initiative has also added momentum to this shift. Public sector tenders now include clauses around data localisation, redundancy across zones, and AI-readiness-effectively setting new benchmarks for compliance.
The MeitY-led IndiaAI mission and Ministry of Electronics & IT’s Centre for Excellence in AI are working to define audit frameworks, performance benchmarks, and data retention norms for AI and cloud infrastructure. This is expected to enhance India’s regulatory attractiveness for global firms.

Hyperscaler Momentum and Enterprise Digitalisation
Hyperscaler activity reached new highs in 2024. Amazon Web Services, Microsoft Azure, and Google Cloud together accounted for over 65% of pre-leased capacity across top six cities. Hyperscaler demand is being driven by three key factors: growing AI and analytics workloads, cloud-native digital transformation programs, and increasing use of hybrid multi-cloud models.
Domestic enterprises too are expanding their colocation footprints. BFSI and telecom companies in particular are migrating mission-critical workloads to colocation facilities to reduce latency and enhance control. The rise in enterprise AI deployments-from chatbots to risk engines-is reinforcing this migration.
A growing number of Indian SaaS companies and unicorns are turning to managed colocation to better control costs, enhance data security, and ensure DPDP compliance-especially in regulated sectors like healthcare, edtech, and insurance.

Real Estate and Investment Landscape
Data centre development in India is now a core vertical within real estate portfolios. Top six cities-Mumbai, Chennai, Bengaluru, Pune, Noida, and Hyderabad-collectively house over 90% of the current colocation capacity. Mumbai continues to lead with 46% of total capacity, followed by Chennai (16%) and Bengaluru (13%).
This year, total capacity across the top 6 cities stood at 1,030 MW. Notably, Chennai saw the highest YoY growth in capacity addition, followed by Hyderabad and Noida. Land acquisitions have picked up pace in Ambattur (Chennai), Hinjewadi (Pune), and Gachibowli (Hyderabad), with 500+ acres under evaluation for future expansion.
Private equity and sovereign funds are doubling down on data centre investments. Over USD 2.4 billion worth of capital commitments were announced in the first half of 2024 alone. Investors are increasingly looking at REIT structures and greenfield data centre parks for long-term yield.
Integrated DC parks with captive power supply, water recycling, and connectivity hubs are gaining preference, with new models being developed in Navi Mumbai, Tambaram, and Greater Noida.

Sustainability and the Road to Net Zero
With the global spotlight on sustainability, Indian data centre operators are making strategic investments in green energy procurement, carbon credit instruments, and energy-efficient cooling systems. The adoption of renewable energy-solar, wind, and hydro-is on the rise. In Mumbai and Chennai, over 35% of operational capacity is now backed by green power purchase agreements.
Sustainability certifications such as LEED, IGBC, and BREEAM are becoming standard requirements in operator RFPs. Moreover, AI-enabled DCIM (Data Centre Infrastructure Management) tools are being used to optimize energy use across mechanical, electrical, and cooling systems.
By mid-2025, a green rating framework for data centres is expected to be launched by the Bureau of Energy Efficiency, enabling tiered incentives for operators meeting efficiency benchmarks.

What’s in 2025?
The trajectory for India’s data centre market in 2025 points toward acceleration on all fronts. Liquid cooling and high-density racks will move from early adoption to industry standard. Edge data centres will proliferate in tier-2 cities, powered by demand for low-latency content delivery, real-time analytics, and 5G applications.
Hyperscalers will continue to anchor new builds, but enterprise clients-especially in BFSI, pharma, and manufacturing-will increasingly drive demand for scalable, AI-ready colocation services. Regulatory enforcement of the DPDP Act will also enter its active phase, forcing providers to double down on compliance infrastructure.
India’s data centre capacity is expected to cross 1,400 MW by the end of 2025, backed by over USD 6.5 billion in cumulative investments. With high-growth drivers like AI, 5G, digital public infrastructure, and smart cities aligning, 2025 may well be the year India transitions from a high-potential market to a global data centre powerhouse.
The future will also bring sharper focus on supply chain resilience, skilled workforce availability, and the development of sovereign AI platforms that will rely on India’s data centre ecosystem not just as a utility, but as a critical pillar of national digital infrastructure.