India is projected to attract an investment of $200 billion in new data centre capacity over the next four years, contributing to a larger $800 billion investment anticipated for the Asia-Pacific region, as highlighted by Deloitte Touche Tohmatsu. Will Symons, the firm’s Asia-Pacific Climate & Sustainability Leader, emphasized that achieving this goal will depend significantly on India’s ability to provide adequate power supply.
Deloitte’s analysis points to the country’s growing renewable energy base as a crucial element in supporting this data centre expansion. However, challenges such as grid stability limitations, restricted substation capacities in growth corridors, and delays in transmission upgrades could hinder progress. A lack of a unified national framework for renewable energy integration for data centres poses additional challenges.
The anticipated data centre investments will primarily be concentrated in states including Maharashtra, Uttar Pradesh, Tamil Nadu, Karnataka, Telangana, and Andhra Pradesh. Deloitte’s Anish Mandal noted that these centres are expected to generate over 10 percent of peak power demand in each of these states by 2030. If powered by renewable energy—a variable resource—India must undertake power system reliability planning to prevent potential grid instability.
Currently, India accounts for 20 percent of global data consumption but hosts less than 5 percent of the world’s data centres. Growth in this sector is driven by factors such as sovereign data regulations, increased usage of artificial intelligence, and improved digital connectivity. The Union Budget for 2026–27 has introduced a tax holiday for foreign companies establishing data centres in India, further incentivizing development in this rapidly evolving sector.
India’s data centre capacity is anticipated to rise from 1.5 GW in 2025 to 8–10 GW by 2030, necessitating a considerable increase in power consumption.
Why this story matters
- Significant investment in data centre infrastructure could boost India’s economic growth and digital capabilities.
Key takeaway
- India’s future in the data centre market hinges on adequate power supply and regulatory support.
Opposing viewpoint
- Concerns about grid stability and power supply could impede the anticipated growth of the data centre sector.
