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The India data center market is one of the fastest-growing markets in the broader global data center market owing to the nation’s push for data localization and security, increased internet penetration and data consumption, and favorable government policies, among others.

However, the extensive demand for power by the data centers, is one of the major factors impeding the growth of the Indian data center market. 

Data centers are the backbone of India's rapidly growing digital economy, supporting a vast array of services for enterprises and government initiatives. Despite their critical role, India hosts only a small fraction of the world's data centers, with major cities such as Mumbai, Delhi NCR, Chennai, Hyderabad and Bengaluru accounting for the majority of total Indian data centers.

 

Current Scenario of the India Data Center Industry

India’s data center industry is witnessing rapid expansion, with significant concentration in a few key metropolitan regions. Mumbai stands out as the dominant hub, accounting for 52% of the country's total data center capacity due to its robust connectivity infrastructure, proximity to submarine cable landing stations, and access to enterprise clients and financial institutions.

Chennai ranks second, contributing 21% of the total capacity, benefiting from its coastal location, which supports cable landing infrastructure and disaster recovery capabilities.

Despite being major Information Technology (IT) hubs, Bengaluru and Hyderabad each account for only 7% of the capacity, indicating that data center growth in these cities has been relatively modest so far. Delhi NCR holds 9%, while Pune and Kolkata contribute 7% and 6%, respectively.

The distribution reflects a market that is still heavily centralized around Mumbai and select coastal cities, though growing demand and infrastructure investments are likely to drive more balanced growth in emerging regions over the forecast period.

Market Dynamics

Drivers

Increased Digitalization and Data Consumption

As of January 2025, India has around 806 million internet users, reflecting a penetration rate of 55.3% and a 6.5% increase in users from the previous year. This growth is significantly bolstered by the widespread availability of affordable data plans, with the average cost per gigabyte plummeting to approximately INR 13.32 (USD 0.16) in July 2024, making digital access highly accessible across the population.

As more people are getting online owing to the soaring internet userbase and affordable connectivity, an exponential volume of data is being generated, processed, and consumed by a digitally active population and an increasingly digital economy. This transformation is a direct testament to the success of government initiatives like Digital India, which aims to empower citizens and transform governance through improved online infrastructure.

This exponential growth in data consumption is the fundamental and most powerful driver propelling the demand for data center infrastructure across India, from hyperscale facilities to distributed edge deployments, as this immense data usage places significant demands on data center infrastructure for storage, processing, and delivery.

The flourishing ecosystem of digital content and services is a core driver of escalating data consumption. India's e-commerce market is experiencing exponential growth, reaching USD 125 billion in 2024 and projected to soar to USD 345 billion by 2030, handling massive data volumes from millions of online shoppers. Simultaneously, the digital payments revolution, spearheaded by platforms like UPI, generates immense real-time transaction data, with UPI alone processing transactions worth over USD 270.3 billion in January 2025 alone.

The surging popularity of OTT streaming and online gaming also contributes heavily to data consumption. Consumers expect seamless, high-quality video and lag-free gaming, necessitating robust data centers for content delivery networks and localized caching. Furthermore, with 491 million active social media user identities in India as of January 2025, user-generated content and online interactions add significantly to the data burden, requiring powerful backend infrastructure.

The rapid deployment and adoption of 5G networks in India are set to further amplify data consumption and transform the data center landscape. This proliferation of 5G enables new, data-intensive applications such as Augmented Reality (AR), Virtual Reality (VR), connected vehicles, industrial IoT, and real-time AI at the Edge. 

These applications demand ultra-low latency and high bandwidth, directly necessitating the expansion of edge data centers to process data closer to its source, ensuring immediate responsiveness and efficient network utilization.

The rising number of internet users, growing use of digital services, and the rollout of 5G are all driving a sharp increase in data usage across India. This rise is not only increasing the amount of data being generated but also changing how quickly and efficiently it needs to be handled. 

As a result, there is a strong need for both large-scale and edge data centers to support the country’s growing digital infrastructure. The continued growth of digital activity in India will remain closely linked to the expansion of its data center capacity.

Restraints

High Power Costs and Limited Access to Reliable Power 

High energy prices are one of the major challenges that the data center industry faces, since power consumption forms one of the big operating costs for the data centers. High volatility in electricity prices heightens the challenge, and companies like Equinix, for example, feel growing pressure on the management of efficient power in order to maintain a profit level.​

High power consumption and ensuring a reliable power supply are indeed significant constraints for the booming data center market in India. As data center capacity rapidly expands to meet the nation's digital demands, the challenges associated with energy become more pronounced.

Data centers are inherently power-intensive, with electricity being the single largest operational cost component. In India, this presents a multi-faceted challenge, beginning with the sheer volume of power required. While data centers currently consume less than 1% of India's total electricity usage, this figure is projected to surge during the forecast period. 

According to the IEA (International Energy Agency), an average AI ready data center can consume as much power as an aluminum smelter or the equivalent of 100,000 homes, placing immense strain on existing local power networks, particularly in concentrated data center hubs like Mumbai and Chennai.

Beyond the volume, the reliability and quality of power supply remain critical concerns. Data centers require uninterrupted, high-quality power 24/7 to ensure uptime and prevent costly disruptions. While major urban centers generally have more stable grids, other regions in India can still experience frequent power outages and voltage fluctuations, necessitating significant investments in expensive and often fossil-fuel-dependent backup systems like diesel generators and Uninterruptible Power Supplies (UPS). 

The initial capital expenditure for such robust power infrastructure, along with ongoing energy costs, substantially impacts the overall economic viability and scalability of data center operations, especially for smaller players or those looking to expand into Tier 2 and Tier 3 cities. 

Furthermore, with the rise of AI-driven data centers, power consumption is set to escalate even further, intensifying the pressure on India's power grid.

Market Segmentation

The India data center market is segmented on the basis of the types of data centers, into the following:

• Hyperscale Data centers: These are large-scale facilities typically used by cloud providers like Amazon, Google, and Microsoft to handle massive amounts of data. Hyperscale data centers offer superior scalability and cost-efficiency, and their demand is growing rapidly with the rise of cloud services. These data centers are primarily present in Tier I cities, majorly located in Mumbai, Chennai, and Noida.

• Colocation Data centers: Colocation facilities allow multiple organizations to lease space, equipment, and bandwidth, sharing operational costs. These data centers are favored by businesses that do not want to manage their own infrastructure.

• Enterprise Data centers: These are privately owned facilities that support individual businesses' IT needs. Despite the growth of cloud and colocation services, many enterprises continue to maintain on-premises data centers for reasons related to security and control.

• Edge Data centers: Designed to process data closer to the source, edge data centers are increasingly important in supporting low-latency applications like autonomous vehicles and IoT devices. These are gaining momentum in Tier II cities such as Jaipur, Ahmedabad, Vizag, Kochi, Bhubaneshwar, Lucknow, Patna, etc.

In the current scenario, colocation data centers dominate the market owing to the benefits users get from shared infrastructure (power, cooling, security) and expert operations without the massive upfront capital expenditure of building their own facilities. 

Meanwhile, hyperscale data centers are expected to witness strong growth during the forecast period, supported by substantial investments by hyperscalers such as AWS, Google, and Microsoft, all of whom have recently announced major expansion plans to scale their digital infrastructure in India.

Recent Developments

• Singapore-based global data center operator Princeton Digital Group (PDG) has secured a long-term lease, spanning over 20 years, for more than 1.06 million sq ft of commercial space in Navi Mumbai's Airoli locality. 

• Sify Infinit Spaces Limited, the Chennai-based data center provider, inaugurated its AI-ready data center campus at Sipcot Siruseri, Chennai, Tamil Nadu, in April 2025. 

• In March 2025, AWS announced its plan to invest approximately USD 8.2 billion in Maharashtra over the coming years. This investment aligns with India's efforts to boost local cloud data storage and is expected to significantly contribute to the country's growing cloud services market.

• In January 2025, Microsoft announced a USD 3 billion investment over the next two years to enhance its cloud and AI infrastructure in India. This initiative includes expanding Microsoft Azure cloud services, establishing new data centers, and aiming to train 10 million individuals in AI skills by 2030.

• In November 2024, Colt Data Centre Services and RMZ announced a joint venture to invest USD 1.7 billion in the Indian Data Centre market.

• In October 2024, the Maharashtra state government approved the establishment of the ambitious Green Integrated Data Center Parks project. This initiative plans to develop multiple large-scale, sustainable data center campuses in and around Navi Mumbai's Airoli locality, ultimately delivering a combined IT capacity of 1.5 GW.

• Ansys Software officially inaugurated its newest high-performance computing (HPC) data center, in October 2024, in Pune.

The new report from Blackridge Research on the India data center market provides comprehensive qualitative and quantitative analyses along with deep market insights.

What Do We Cover in the Report?

Data Center Market Drivers & Restraints 

The study covers all the major underlying market dynamics that help the market develop and grow, as well as the factors that constrain India market growth.

The report includes a meticulous analysis of each factor, explaining the relevant, qualitative information with supporting data.

Each factor's respective impact in the near, medium, and long term will be covered using Harvey balls for visual communication of qualitative information and will function as a guide for you to analyze the degree of impact.

Data Center Market Analysis

This report discusses the market overview, the latest updates, critical commercial developments and structural trends, and government policies and regulations. 

Data Center Market Size and Demand Forecast

The report provides the India data center market size and demand forecast until 2030, including year-on-year (YoY) growth rates and CAGR.

Data Center Industry Analysis

The report examines the critical elements of the data center supply chain, its structure, and the participants.

 The report uses the PESTEL framework to assess the data center industry's competition and profitability.

Data Center Market Segmentation & Analysis

The report dissects the India data center market into various segments based on type (Hyperscale Data Centers, Colocation Data Centers, Enterprise Data Centers and Edge Data Centers) and Tier (Tier I, Tier II, Tier III, and Tier IV).

A detailed summary of the current scenario, recent developments, and market outlook will be provided for each market segment.

Further, data center market share, size, and demand forecasts will be presented, along with various drivers and barriers for individual market segments.

Effective market segmentation enables you to identify emerging trends and opportunities for long-term growth. Contact us for "bespoke" market segmentation to better align the research report with your requirements.

Key Company Profiles

This report presents detailed profiles of key companies in the data center industry, such as STT Global Data Centers India Pvt Ltd., Nxtra Data Ltd., Iron Mountain (Web Werks India), CtrlS Datacenters Ltd., Sify Technologies, DigitalConnexion, STT GDC, Adani Connex, NTT Communications, Tata Communications Ltd., Reliance Group, ESDS Software Solution Limited, Yotta Data Services, Amazon Web Services (AWS), Google, Microsoft etc. In general, each company profile includes an overview of the company, relevant products and services, a financial overview, and recent developments.

Competitive Landscape

The report provides a comprehensive list of notable companies in the market, including mergers and acquisitions (M&As), joint ventures (JVs), partnerships, collaborations, and other business agreements related to the data center project.

The study also discusses the strategies adopted by leading data center and AI companies.

Executive Summary

The Executive Summary will be packed with charts, infographics, and forecasts. This chapter summarizes the report's findings crisply and clearly.

The report begins with an executive summary chapter and ends with conclusions and recommendations.