India’s data center boom: Building the future, testing the grid

Athul Nath MS | December 8, 2025

India is building one of the world’s fastest-growing data center networks. With over 850 million internet users, UPI hitting 10 billion monthly transactions, and AI adoption accelerating across sectors, demand for digital infrastructure has exploded. CRISIL estimates India’s data center capacity will double to 2.5 GW by FY28, while Colliers projects a tripling by 2030—an expansion backed by giants like Reliance, Adani, Yotta and NTT.

But behind this extraordinary rise lies a tougher question India can’t ignore: can the country’s power system support the digital backbone it’s racing to build?

India is in the middle of a digital explosion. With over 850 million internet users and UPI crossing 10 billion transactions a month, the country’s appetite for data has never been bigger. Behind this surge lies an infrastructure quietly becoming the backbone of everyday life—data centers.

And their growth is staggering. CRISIL expects India’s capacity to double to 2.3–2.5 GW by FY28, while Colliers projects it could triple by 2030, making India one of the world’s fastest-growing data center markets. Backed by massive investments from Reliance, Adani, Yotta, NTT and policy incentives under the Draft National Data Centre Policy 2025, the sector is scaling at unprecedented speed.

But this boom comes with a challenge: can India’s power system keep up?

Data centers are energy-hungry. Globally, they consumed 448 TWh of power in 2025—a figure Gartner says will double by 2030, driven largely by AI-heavy workloads. The Ministry of Power estimates Indian data centers could take up 5–6% of national electricity demand by 2030, in a grid still dominated by coal and uneven renewable supply.

India’s digital ambitions and its energy readiness are now deeply intertwined. The question is no longer whether India can build data centers—but whether it can power them.

	Current (2023–24)	Projection (2027–30)	Source
Installed Capacity	~870 MW	2,500 MW by 2027	CRISIL Ratings
Revenue	₹11,000 crore	₹20,000 crore by FY28	CRISIL Ratings
Market Size	$5–6 billion	$15 billion by 2030	Colliers
Share of Global Demand	<2%	5–6% by 2030	Gartner

Table 1: India’s Data Center Growth Trajectory

Data center growth trajectory

India’s data center industry is no longer confined to a handful of server farms in Mumbai or Bengaluru—it is rapidly evolving into a nationwide infrastructure backbone. According to Colliers India (2025), the country’s installed data center capacity stood at approximately 870 MW in 2024, and is projected to reach 2,500 MW by 2027, before tripling to 4.5 GW by 2030. This trajectory places India among the fastest-growing data center markets globally, second only to China in Asia.

The growth is geographically concentrated but diversifying. Mumbai remains the largest hub, accounting for nearly 50% of current capacity, thanks to its submarine cable landing stations and proximity to financial institutions. Chennai is emerging as the next big hub, with hyperscale investments driven by its coastal connectivity and availability of land. Hyderabad and Bengaluru are leveraging their IT ecosystems, while Delhi NCR is attracting investments due to government demand and enterprise clusters.

Private sector participation is driving this expansion. Reliance Jio has announced plans for multiple hyperscale facilities, while AdaniConneX (a joint venture with EdgeConneX) is building greenfield data centers across Chennai, Noida, and Hyderabad. NTT India and Yotta Infrastructure are also scaling aggressively, with Yotta’s Greater Noida facility alone designed for 30,000 racks and 200 MW IT load.

Government policy is acting as a catalyst. The Draft National Data Centre Policy 2025 proposes 20-year tax exemptions, single-window clearances, and incentives for renewable energy integration. States like Tamil Nadu, Maharashtra, and Telangana have rolled out their own data center policies, offering land at concessional rates and subsidized power tariffs.

This combination of private capital and policy support is creating a robust pipeline. As per CRISIL Ratings, India’s data center industry is expected to attract ₹45,000–50,000 crore in investments by FY28, with annual revenues crossing ₹20,000 crore. The trajectory is clear: India is positioning itself as a global hub for digital infrastructure, but the sustainability of this growth hinges on energy preparedness—a theme we will explore in the next section.

Region / City	Share of Capacity (%)	Key Drivers
Mumbai	~50%	Submarine cables, BFSI demand, hyperscale hubs
Chennai	~20%	Coastal connectivity, hyperscale investments
Hyderabad	~10%	IT ecosystem, land availability
Bengaluru	~10%	Tech clusters, enterprise demand
Delhi NCR	~8%	Government demand, enterprise clusters
Others (Pune, Kochi, Ahmedabad)	~2%	Emerging secondary hubs

Table 2: Regional Distribution of Data Center Capacity (2024–25) *Sources: Colliers India, CRISIL Ratings, IBEF (2025)

Energy demand projections

India’s data center boom is ultimately a story about electricity. These facilities are among the most energy-intensive assets, running servers and cooling systems 24/7. Globally, data centers consumed 448 TWh of power in 2025, a number Gartner expects to more than double to 980 TWh by 2030—driven largely by AI-optimized servers.

India is following the same trajectory. The Ministry of Power projects that data centers could account for 5–6% of India’s total electricity demand by 2030, up from under 2% today, at a time when national power demand is already rising 6–7% annually.

The scale of consumption is staggering. A single hyperscale facility can draw 100–200 MW—enough to power a mid-sized city. With capacity expected to reach 2.5 GW by 2027 (CRISIL Ratings), the load on the grid will intensify, especially in hubs like Mumbai and Chennai where transmission networks are already stretched.

Cooling further complicates the picture. CEA estimates show cooling systems account for 30–40% of total energy use, and water-heavy cooling could strain resources in states like Tamil Nadu and Maharashtra.

India’s dependence on coal—over 70% of generation—adds sustainability concerns. While renewable capacity is growing, integration into data center operations remains uneven. Some players, such as AdaniConneX and Yotta, are exploring solar-wind hybrid PPAs, but widespread adoption is still limited.

The real challenge isn’t whether India can meet future power demand—it’s whether it can meet it sustainably. Without faster renewable integration, smarter grids, and energy-efficient cooling, the data center boom risks becoming an energy burden rather than a digital advantage.

Indicator	Current (2024–25)	Projection (2030)	Source
Share of National Power Demand	~2%	5–6%	Ministry of Power
Global Consumption (TWh)	448 (2025)	980 (2030)	Gartner
AI Server Consumption (TWh)	93 (2025)	432 (2030)	Gartner
Cooling Share of Energy Use	30–40%	35–40%	CEA
Typical Hyperscale Facility Load	100–200 MW	200+ MW	CRISIL Ratings

Table 3: India’s Data Center Energy Outlook

Challenges to preparedness

India’s data center boom is remarkable, but several structural challenges threaten its long-term sustainability. The biggest hurdle is the country’s dependence on coal, which still supplies over 70% of total electricity (CEA, 2025). Despite renewable capacity crossing 190 GW, access to clean power remains uneven due to transmission constraints, especially in states like Maharashtra and Tamil Nadu.

Infrastructure stress is another concern. CEA data shows that peak demand in hubs such as Mumbai and Chennai already strains transmission capacity. Adding hyperscale data centers—each consuming 100–200 MW—could overload local grids without major upgrades in smart grid systems and storage.

Cooling demands intensify the challenge. With 30–40% of data center energy going toward cooling, and many facilities relying on water-heavy methods, resource pressure increases. TERI’s 2025 study warns that rapid expansion in water-stressed regions like Tamil Nadu could worsen local scarcity.

Regulatory gaps persist as well. India lacks binding energy efficiency norms for data centers, unlike the EU or Singapore. Voluntary certifications like LEED and ISO 50001 are mostly adopted by large players, while smaller operators often prioritize cost over sustainability. Financing remains a barrier too. India has no dedicated policy or incentive mechanism to support green data center investments. Without targeted subsidies or financing for renewable PPAs, battery storage, or advanced cooling technologies, widespread adoption remains slow.

Challenge	Current Status (2025)	Risk Implication
Coal Dependence	70% of power generation from coal	High carbon footprint, ESG risks
Transmission Bottlenecks	Peak demand exceeds capacity in Mumbai, Chennai	Grid instability, outages
Cooling & Water Stress	30–40% of energy use; water-intensive systems	Resource scarcity in coastal states
Regulatory Gaps	No binding efficiency standards	Uneven compliance, sustainability lag
Financing Constraints	No dedicated green infra financing	Limited renewable adoption

Table 4: Key Challenges in India’s Data Center Preparedness *Sources: CEA, TERI, Ministry of Power, Colliers India (2025)

Strategic levers for sustainable growth

India’s data center surge can either strain the power grid or become a model for sustainable digital infrastructure. The outcome will depend on how effectively the country deploys key strategic levers to balance growth with energy readiness.

Renewable Energy Integration:
With renewable capacity now over 190 GW (MNRE, 2025), solar–wind hybrid PPAs are emerging as the most critical lever for clean data center growth. Operators like AdaniConneX and NTT India are already piloting hybrid renewable models. Scaling these efforts will be essential to reducing coal dependence and aligning with India’s net-zero 2070 target.

Green Standards & Certifications:
Global frameworks—such as Singapore’s Green Data Centre Standard and the EU Code of Conduct—show how mandatory norms can drive efficiency. India currently depends on voluntary certifications like LEED and ISO 50001, with limited adoption. Expanding mandatory standards could cut energy use by 15–20% (TERI, 2025).

Battery Storage & Smart Grids:
To manage peak loads and support renewable integration, India will need 27 GW of battery storage by 2030 (CEA). Embedding data centers into smart grid systems—treating them as flexible loads—will be crucial, especially in already stressed hubs like Mumbai and Chennai.

Policy Support & Financing:
The Draft National Data Centre Policy 2025 proposes 20-year tax exemptions and single-window clearances, but financing remains a missing piece. A dedicated funding window for green data center infrastructure, similar to the Agri Infrastructure Fund (AIF), could accelerate adoption of renewable PPAs, advanced cooling, and battery storage. States like Tamil Nadu and Telangana are already offering subsidized tariffs and concessional land.

Innovation & Value Addition:
Advanced cooling technologies—such as liquid immersion cooling—can reduce energy use by 30%. Water recycling can ease pressure in water-stressed regions. These technologies, combined with renewable integration, can help India transition from a fast-growing data center market to a global leader in green digital infrastructure.

Lever	Current Status (2025)	Potential Impact by 2030
Renewable Integration	190 GW installed; limited PPAs in data centers	Reduce coal dependence; align with net-zero
Efficiency Standards	Voluntary LEED/ISO adoption	15–20% energy savings if mandatory
Battery Storage	5 GW installed nationally	27 GW needed for stability
Policy Incentives	Draft policy with tax exemptions	Attract ₹50,000 crore investments
Cooling Innovation	Air cooling dominant	30% energy savings via liquid immersion

Table 5: Strategic Levers for Sustainable Data Centers *Sources: MNRE, CEA, TERI, Colliers India, Draft National Data Centre Policy (2025)

Balancing bytes and watts

India’s data center surge is powering the country’s digital economy—but it’s also testing the limits of its energy system. By 2030, data centers could consume 5–6% of India’s total electricity, making sustainable power a critical priority. The challenges are significant: a coal-heavy grid, transmission bottlenecks, water-intensive cooling, and the absence of binding efficiency standards.

Yet the opportunity is huge. With ₹45,000–50,000 crore in planned investments by FY28, India can position itself as a leader in green digital infrastructure by scaling renewable PPAs, improving energy standards, deploying storage, and adopting advanced cooling technologies.

Getting there will require coordinated action—from policymakers fast-tracking the Data Centre Policy, to states aligning incentives, to operators embracing cleaner technologies. With platforms like TPCI bringing industry and stakeholders together, India has a real chance to build a digital backbone that is not just large, but sustainable.

If India can balance rapid expansion with clean power, it won’t just grow its digital economy—it will set a global benchmark for responsible data infrastructure.

Athul Nath MS is the State Head – Kerala at the Trade Promotion Council of India (TPCI), with over 15 years of experience in government relations, investment facilitation, and technology-driven development.