India’s data centre capacity is projected to surge nearly six-fold from around 1.8 GW to approximately 10.5 GW by FY2031, driven by rapid AI adoption, data localisation policies, cloud expansion, and rising digital consumption. According to a Morgan Stanley report, artificial intelligence workloads alone could account for nearly 6.8 GW of the projected capacity growth.
The expansion is expected to trigger a massive multi-year investment cycle across digital infrastructure, with an estimated $60 billion industrial capital expenditure pipeline covering land acquisition, power systems, cooling infrastructure, networking equipment, and hyperscale data centre campuses. Over $20 billion of investments may be required specifically for power and energy ecosystems to support AI-intensive facilities.
India’s growing emphasis on data sovereignty, digital public infrastructure, AI innovation, and enterprise cloud migration is accelerating investments from global hyperscalers and cloud providers. Government initiatives including data localisation norms, infrastructure status for data centres, and fiscal incentives are also supporting large-scale capacity expansion.
Industry experts believe India is emerging as one of the world’s fastest-growing markets for AI-ready digital infrastructure, supported by increasing demand for low-latency computing, GPU clusters, edge computing, and renewable-powered data centres. Major upcoming hyperscale projects, including large AI-ready campuses in Visakhapatnam and other digital corridors, reflect the scale of infrastructure being planned.
Why This Matters
• Positions India as a major global hub for AI-ready digital infrastructure
• Accelerates investments in hyperscale data centres, cloud computing, and AI ecosystems
• Strengthens India’s data localisation and digital sovereignty capabilities
• Drives large-scale investments in renewable energy and power infrastructure
• Supports rapid growth of fintech, e-commerce, OTT, telecom, and enterprise AI services
• Creates significant opportunities in technology infrastructure, manufacturing, and high-skilled employment