India’s data centre (DC) industry is on a growth trajectory, driven by the increasing adoption of artificial intelligence (AI) and the rollout of 5G technology. According to JLL India, the sector is expected to add 604 MW of capacity between the second half of 2024 and 2026, bringing the total capacity from 917 MW to 1,521 MW.
The rapid integration of AI and 5G technologies is boosting the demand for data centres. By the end of 2023, 5G coverage was estimated to reach over 90% of India’s population, creating a strong foundation for digital infrastructure.
“India is becoming a global centre for AI innovation and data centre development. Hyperscalers are pursuing self-build projects, while operators are planning campuses equipped to support AI clusters. Navi Mumbai, in particular, is emerging as a key hub, with potential demand projected at 800 MW,” said Rachit Mohan, APAC Lead – Data Centre Leasing, JLL.
The Indian government‘s approval of a $1.24 billion (Rs 10,732 crores) investment in AI infrastructure is expected to further accelerate the sector’s expansion. AI-ready infrastructure, combined with 5G, is anticipated to play a transformative role in India’s digital ecosystem.
Mumbai to maintain top position
Mumbai is expected to maintain its position as the leading market for data centres, while Chennai and other regions are likely to experience significant growth. Navi Mumbai is emerging as a strategic location, bolstered by its potential to meet growing demand.
The industry has already shown robust growth, expanding 2.5 times over the past 4.5 years (2019-H1 2024) at a compound annual growth rate (CAGR) of 24%. In the first half of 2024, the sector reached a capacity of 917 MW, with an occupancy rate of 873 MW, indicating tight supply conditions.
JLL estimates that the expansion of India’s DC industry will require approximately 7.3 million sq. ft. of real estate and a capital investment of $3.8 billion by 2026. “Mumbai is likely to retain its market leadership, while Chennai and other regions are anticipated to grow,” said Dr. Samantak Das, Chief Economist and Head of Research & REIS at JLL.
The ongoing growth is also creating demand for skilled professionals and stimulating related industries, contributing to economic development.
Implications for India’s Digital Economy
The growth of the data centre industry is poised to strengthen India’s digital infrastructure and foster innovation across various sectors. The sector’s expansion aligns with the increasing reliance on AI and 5G technologies, which are reshaping India’s technological landscape.
Supported by government initiatives, private investments, and technological advancements, the industry’s development is expected to play a critical role in India’s economic and digital transformation. As the sector evolves, it is likely to provide new opportunities while solidifying India’s position as a key player in the global technology ecosystem.
