MUMBAI, Sept 02 – India’s data centre industry is experiencing an unprecedented transformation, with capacity projected to surge from 1.6 GW as of June 2026 to 6 GW by 2029, establishing the country as Asia’s fastest-growing digital infrastructure market, according to JLL. This explosive expansion, fueled by Artificial Intelligence (AI) workloads and hyperscale cloud deployments, will require USD 110 billion in capital investments and create infrastructure capacity of multiple gigawatts across the country.
The sector demonstrated remarkable momentum in H1 2026 (January-June), recording 101 MW of absorption, exceeding the three-year H1 average by more than 20%. Supply remained robust with 85 MW delivered during the period, primarily concentrated in Mumbai and Chennai. Accelerated pre-committed deliveries have driven vacancy levels to a record low of 2.8%, reflecting exceptional market fundamentals.
“India’s data centre landscape is undergoing a fundamental transformation unprecedented in scale and ambition. The convergence of landmark tax incentives with massive hyperscale investments for AI-driven infrastructure requirements positions India as a strategic global hub for digital innovation.” said Rachit Mohan, Managing Director, Data Centre Leasing, APAC, JLL. “With 4.4 GW of new capacity requiring USD 110 billion in capital by 2030, we are witnessing the creation of an entirely new digital infrastructure ecosystem that will reshape India’s technology landscape and drive economic growth for decades to come,” he added.
Hyperscale growth drives self-build surge
Global hyperscalers are fundamentally reshaping the market dynamics by committing to building nearly 30% of new capacity through self-build facilities. By 2029, hyperscale self-build is expected to deliver 1.4 GW, with major investments transforming locations like Hyderabad and Visakhapatnam into gigawatt-scale hubs alongside established markets like Mumbai and Chennai.
Strategic Policy catalysts unlock long-term growth
The India Union Budget 2026-27’s 20-year tax holiday for foreign cloud service providers, extending until March 31, 2047, has dramatically accelerated investment commitments. This policy has attracted over USD 50 billion in foreign capital commitments. The initiative positions India as a global hub for routing global AI and cloud services while de-risking long-term capital deployment.
Regional expansion creates multi-billion-dollar opportunities
The 4.4 GW supply pipeline through 2029 will be distributed strategically: Mumbai will capture 35% share (predominantly colocation), Hyderabad 24% (mixed self-build and colocation), Visakhapatnam 14%, and Chennai 9%. The expansion demands USD 4 billion for real estate construction, USD 18 billion for mechanical, electrical, and plumbing infrastructure, and USD 88 billion for IT equipment including servers and racks.
Sustainability and innovation drive next-generation infrastructure
The industry is advancing green data centre practices with liquid cooling technologies, increased renewable energy integration, and sustainable building design. India’s ambitious nuclear energy expansion—targeting 22.38 GW by 2031-32 and 100 GW by 2047—will provide critical baseload power. The development of Small Modular Reactors (SMRs) by 2033 offers future potential for off-grid power solutions for large data centre campuses.
Data protection framework strengthens market fundamentals
The Digital Personal Data Protection (DPDP) rules implementation, with full compliance required by May 2027, is creating opportunities for compliant infrastructure providers. The framework mandates immediate breach reporting, enhanced security protocols, and localized data processing—driving demand for sovereign data centre capacity across BFSI, healthcare, and technology sectors.
The capital-intensive expansion is creating ripple effects across power generation, real estate, telecommunications, and manufacturing sectors while generating substantial demand for skilled technical talent. With state governments rapidly augmenting grid transmission infrastructure and providing renewable energy incentives, India’s data centre ecosystem is positioned for sustained, multi-decade growth as a critical pillar of the nation’s digital economy.