India’s data centre capacity to nearly double by 2027, says ICRA

India’s data centre (DC) operational capacity is expected to increase to 2,000-2,100 MW by March 2027 from around 1,150 MW as of December 2024, on the back of data usage and data localisation initiatives, according to rating agency Icra.

Indian data centre players are projected to invest Rs 2 lakh-2.3 lakh crore, with a development pipeline of 3-3.5 GW to be delivered over the next 7-10 years.

"Driven by AI requirements, the global DC market has already witnessed multiple large deals (>300 MW) signed by hyperscalers and India is expected to follow the trend. This, coupled with favourable regulatory policies and an infrastructure status for the DC sector will support strong growth prospects in India in the coming decade," ssaid Anupama Reddy, Vice President and Co-Group Head, Corporate Ratings, Icra.

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While cloud, 5G rollout, machine learning and internet of things (IoT) are expected to generate enormous data and storage requirements, GenAI-led high computing requirements present a new wave of demand for data centre capacity, she added.

Mumbai and Chennai have maximum landing stations, with the former being a preferred location for data centre operators, Icra said.

About 75% of the upcoming facilities over the next three years are concentrated in Mumbai, Chennai and Hyderabad, it said.

“Co-location services, backed by hyperscalers, contribute to the majority (80-85 per cent) of the DC revenues for major developers. However, with the increase in the number of DC developers in India (from 5 in 2019 to 18 in 2025), servicing the same set of hyperscalers has led to moderation in rentals in the recent past as negotiation power has tilted more towards them. As a result, Icra expects an increase in the payback period and an impact on return metrics for the majority of the developers in the medium term,” said Reddy.