India is poised to become a global AI data centre hub

The growing demand for AI-led services has put India on the path to becoming a key global hub for AI-powered data centres.

AI data centres are specialised facilities that support the intense computational and data demands of artificial intelligence and machine learning workloads.

In the run-up to TechSparks 2025, where AI takes centre-stage, we explore the elements that put India in a pre-eminent position in this ecosystem.

First, the country is said to have over 900 million internet subscribers by 2025, who provide a great platform for massive consumption of data. Second, the $280-billion technology industry in the country has a pool of skilled AI professionals. The third factor is the government’s thrust on AI with several specific policies, as it seeks to achieve a $1-trillion digital economy by 2028.

Global consultancy firm Deloitte in its report titled ‘Attracting AI Data Centre Infrastructure Investment in India’ notes that India is set to become one of the fastest growing leaders in AI— the country’s AI market is expected to reach $20 billion to $22 billion by 2027, at a compounded annual growth rate of 30 per cent. Most importantly, the country generates 20 per cent of the world’s data.

Neha Aggarwal, Partner, Deloitte India, says, “India's strategic location allows it to serve domestic and global markets effectively, positioning it as a critical node in the global data centre ecosystem.”

Data centres to drive innovation

The foundation for all things AI is the data centre. This is the mother ship that will drive all innovation.

Data centres are measured by energy or power consumption, a key requirement to run all operations.

Real estate consultancy firm JLL notes that India’s data centre industry is poised for explosive growth, with capacity projected to surge 77% by 2027, reaching 1.8 giga watt (GW). The data centre industry in India already surpassed 1 GW in 2024.

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Samantak Das, Chief Economist and Head of Research & REIS, India, JLL says, “The Indian data centre industry is poised for unprecedented growth, driven by technological advancements and supportive government policies. We anticipate a significant capacity expansion of 77% by 2027, reaching 1,825 MW. This growth trajectory will necessitate substantial investments in infrastructure and compliance measures.”

According to JLL, the demand for data centres is driven by cloud service providers and the burgeoning AI sector. This growth positions India as a rising powerhouse in the global digital infrastructure landscape, it adds.

However, despite the strides made by India in data centre expansion, it still lags behind countries like the United States or China.

The Deloitte report notes that India has less than 2 per cent of the global data centre capacity, accounting for 150 centres of the 11,000 spread across the world.

The numbers may be small now, but there exists a strong opportunity for expansion of data centres in India.

Property consultancy firm Anarock, in a report on data centres in India, says data centres are going to play an important role in the digital transformation of the country with increase in demand for compute power, storage, and data management capabilities.

Also, as generative AI moves into real-time application, low latency processing becomes critical, and this will push the need for edge data centres across the country. These are centres that provide computing power closer to the edge of a network of devices.

The growth of digital India demands better user experience with low-latency data usage and strategy deployment of edge data centres to ensure security and reliability for enterprises hosting critical applications.

Today, the players operating in the data centre space in India are a mix of cloud service providers and companies that purely host such services.

Data centres are present largely in Mumbai and Chennai, which account for about 70 per cent of the total IT power capacity. Hyderabad, Bengaluru and Delhi-NCR also have a sizeable presence.

The recent developments around AI and data centres are bringing together multiple stakeholders to build the next set of data centres in the country. These include governments, technology companies, and real estate firms.

The government’s National AI mission aims to provide high-end graphics processing units (GPU) to startups and academic institutes to foster entrepreneurship and innovation.

Becoming AI-ready

The real strength of India as a key global data centre hub will be its talent. India’s technology industry has an employee strength of 5.8 million, says industry body Nasscom. According to industry estimates, another 0.4 million is present across non-tech companies in sectors such as banking, manufacturing, and pharmaceuticals.

The Indian IT industry has undertaken efforts to train their employees to become AI-ready.

Deloitte says India will become the second largest talent base for AI globally with a projected 1.25 million-1.35 million professionals in AI by 2027.

The key challenges in this journey are in strengthening research and development, talent availability, and improving data frameworks, says S Anjani Kumar, Partner, Deloitte India. “For India to accelerate its AI capabilities and realise its potential, it is necessary to introduce enabling policies to support the sector. India must develop its AI-ready infrastructure to meet the rising demand for data analytics and processing.”

He adds, “By addressing key areas of growth and investment and promoting stronger public–private partnerships, India can solidify its position as a global AI ecosystem leader.”

Learn more about India's AI efforts at TechSparks 2025 from November 6 to 8 at Taj Yeshwantpur, Bengaluru, where builders, researchers, regulators, and investors come together to chart the country's AI future.