Driven by surging data consumption, rapid cloud adoption, and the growing use of artificial intelligence (AI), India’s data centre capacity is projected to rise to about 8 GW by 2030, from around 1.4 GW as of the second quarter (Q2) of 2025, said the Economic Survey 2025-26.
AI data centres are specialised, high-performance facilities designed to meet the intensive computational needs of artificial intelligence, machine learning and deep learning workloads.
Growth opportunity
However, despite generating nearly 20 per cent of the world’s data, India hosts only about 3 per cent of global data centres—around 150 out of 11,000 worldwide—according to Nasscom, highlighting both a significant growth opportunity and a competitiveness gap, the Survey noted.
“Data centres are also double-edged swords, as they are highly energy-intensive. With emerging hubs such as Malaysia (Johor), Japan and Vietnam intensifying competition, addressing structural constraints such as energy shortages will be critical for India to position itself as a global AI data centre hub,” it said.
Data centres form a critical component of India’s IT ecosystem, supporting application hosting, data processing and storage for government platforms, financial services, enterprises and citizen-centric applications.
Current capacity
Per industry estimates, India’s installed data centre capacity stood at around 1,280 megawatts (MW) as of June 2025, with about 130 privately operated data centres and 49 run by government agencies at the central and State levels.
The sector remains largely private-led and deregulated, facilitated by policy initiatives under Make in India and Atmanirbhar Bharat aimed at strengthening domestic electronics and semiconductor manufacturing across the data centre value chain, the Survey said.
The Survey also noted that AI development has followed a resource-intensive path, with this intensification reflected in the sharp projected rise in electricity consumption by data centres across major regions.
Grid stress
Grids have become increasingly unstable, power supply has been disrupted and energy costs have risen, compounded by the shift towards intermittent power sources such as solar and wind. While frugal AI may be possible, it is neither imminent nor commercially scalable at present, it added. The Survey also noted that the US federal government has barred states from regulating AI.
Infrastructure risks
“AI development is inextricably linked to physical infrastructure. Data centres require large quantities of electricity and water, and AI workloads introduce volatility in power demand, posing risks to grid stability. Global experience shows that AI-driven data centre expansion can place significant strain on existing energy systems, even in advanced economies,” the Survey said.
Published on January 29, 2026
