India's Data Centre Capacity Projected to Surge to 12 GW by 2030 as AI and Digital Economy Fuel Expansion

India’s data centre capacity is on track to reach 12 gigawatts (GW) by 2030, a more than fivefold increase from the 2.2 GW recorded in 2025, according to a new report from Wood Mackenzie. The rapid growth is being driven largely by soaring demand from artificial intelligence workloads, cloud providers, and enterprise digitalisation.

AI-dedicated capacity alone is expected to jump from 275 megawatts (MW) to 6,546 MW over the same period — an almost 24-fold rise — as hyperscale cloud operators and AI-native firms pour investment into compute infrastructure. Wood Mackenzie’s assessment places India among the fastest-growing data centre markets in the Asia-Pacific region, underpinned by a digital economy valued at INR32 trillion (roughly 12% of GDP) in 2025.

The country’s more than 1.03 billion active internet users and roughly 22 billion Unified Payments Interface transactions each month are adding sustained pressure on capacity. At the same time, the domestic AI market is projected to reach INR11.7 trillion by 2032, generating another powerful demand driver for data centre space.

Electricity consumption is emerging as a defining feature of this expansion. Wood Mackenzie forecasts that data centre electricity demand in India will climb from 10 terawatt-hours (TWh) in 2025 to 191 TWh by 2040 — a 20-fold increase that would see the sector account for 7% of total national power demand. That rising requirement is reshaping where projects are built and how developers plan them. Access to reliable, cost-competitive electricity has overtaken land and capital as the primary constraint on new development.

Maharashtra and Tamil Nadu currently house about 65% of installed IT load, but the next wave of investment is spreading across states such as Andhra Pradesh, Telangana, Uttar Pradesh, and Karnataka, as operators seek locations with better power economics and policy support. Global technology groups including Amazon Web Services and Google are expanding in the market, while domestic player AdaniConnex has announced a development pipeline of 2.6 GW, underscoring the scale of planned capacity.

Wood Mackenzie’s Hub Attractiveness Index compares Indian data centre markets using factors such as power economics, sustainability, infrastructure, and policy support. The index reflects a market where site selection is increasingly shaped by operating conditions rather than land access alone. “India’s data centre market becomes a structural investment thesis,” said Souhardya Pal, Research Associate at Wood Mackenzie. “The convergence of hyperscale capital, AI workload growth, and a decade of policy support have created the conditions for India to rival any market in Asia-Pacific. The question for developers and investors is no longer whether to enter India, but where and how.”

Developers are turning to captive generation and long-term renewable power purchase agreements to manage both cost and supply. States with more liberal open-access rules and competitive intra-state transmission charges are emerging as preferred locations for new builds. Large facilities require steady, round-the-clock power at specific grid nodes, making energy procurement strategy central to investment decisions from the outset.

Water availability is another increasing concern, particularly as AI workloads drive higher rack densities and cooling needs. Water-stressed states such as Tamil Nadu and Karnataka could face greater scrutiny as data centre demand rises. According to the report, developers using closed-loop cooling systems and zero liquid discharge technologies are already reducing freshwater use. “Land and capital are no longer the limiting factors for data centre developers in India. What determines site selection and delivery timelines now is access to firm, round-the-clock power at the node level,” said Dr. Rashika Gupta, Vice President of Research at Wood Mackenzie. “Developers who secure their power strategy early through captive generation or long-term renewable PPAs will lock in a structural cost and sustainability advantage for the life of their assets.”

Wood Mackenzie concluded that long-term success in the market will depend on balancing digital demand with infrastructure resilience. Reliable power access, water management, and state-level policy conditions are expected to play an ever larger role as the market scales.