India’s data centre sector is entering a high-growth phase, with total development pipeline capacity reaching 3.1 GW, positioning the country among the fastest-expanding digital infrastructure markets globally, according to a report by Cushman & Wakefield.
The report highlights that India now ranks as the second-largest data centre market in the Asia Pacific (APAC) region, with 1.6 GW of operational capacity, driven by rapid adoption of artificial intelligence (AI), hyperscale cloud expansion, and growing enterprise demand.
Mumbai Leads, Hyderabad Gains Global Prominence
Among Indian cities, Mumbai has emerged as a primary data centre hub in APAC and is expected to cross 1 GW of operational capacity by the end of 2026. The city continues to anchor India’s data centre growth due to its strong connectivity, financial ecosystem, and proximity to subsea cable landing stations.
Meanwhile, Hyderabad has gained global recognition, ranking ninth among secondary data centre markets worldwide. It is also identified as the leading secondary market in APAC, reflecting strong investor interest and infrastructure readiness.
Other cities such as Chennai, Delhi NCR, Pune, and Bengaluru are also witnessing increasing development activity, indicating a multi-market growth strategy.
Strong Pipeline and Future Capacity
India’s long-term growth outlook remains robust, with over 10.5 GW of additional capacity currently at the land acquisition stage. This signals sustained investor confidence and a strong pipeline of future projects.
Despite this rapid expansion, the sector remains underpenetrated. Data centre density in India stands at approximately 943,000 people per MW, suggesting significant room for further growth compared to global benchmarks.
Vacancy levels have also tightened, declining to 12.9% as of Q4 2025, indicating strong absorption of new capacity and sustained demand.
AI and Hyperscalers Driving Demand
The report notes that hyperscaler demand—led by global cloud providers—and the increasing adoption of AI workloads are the primary drivers of capacity expansion in India. Cities like Mumbai, Hyderabad, and Pune are witnessing large-scale deployments as enterprises scale their digital operations.
Emerging locations such as Visakhapatnam are also being positioned as future AI and data infrastructure hubs, reflecting a shift toward newer, scalable markets.
APAC Trends Mirror India’s Growth
India’s growth aligns with broader trends across the APAC region, where data centre capacity expanded by over 1.5 GW in the past year alone—a 13% increase. Vacancy across the region declined from 12.4% to 10.9%, underscoring strong occupier demand.
Notably, most new data centres are being pre-leased before completion, with nearly all under-construction capacity already committed. This highlights the intensity of demand and supply constraints across key markets.
Policy Support and Power Challenges
India’s data centre expansion is further supported by policy initiatives such as the Draft National Data Centre Policy 2025, which proposes tax incentives and GST benefits to attract investment.
Additionally, the country ranked fourth globally in electricity production growth between 2022 and 2025, strengthening its ability to support energy-intensive data centre infrastructure. However, transmission losses of over 14% remain a concern, pointing to the need for continued upgrades in grid efficiency.
Execution Will Define Next Phase
Industry experts note that the global data centre sector is shifting from a demand-driven to an execution-driven growth phase, where access to power, land, and regulatory approvals will determine market competitiveness.
India’s combination of strong demand visibility, expanding infrastructure, and a growing multi-city ecosystem positions it well to capitalize on this shift. However, timely execution and infrastructure readiness will be critical in sustaining long-term growth momentum.
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