Data centres to attract Rs. 1,60,000 crore (US$ 18.67 billion) investment in next five years: Report
- IBEF
- July 10, 2025
India’s data centre (DC) sector is projected to attract investments worth Rs. 1,60,000 crore (US$ 18.67 billion) to Rs. 2,00,000 crore (US$ 23.33 billion) over the next five to seven years, according to a report by India Ratings and Research. Demand for DC capacities is expected to keep pace with supply additions, supporting stable to moderate growth in occupancies and rental rates. Fresh capacity announcements total 7.1 gigawatts (GW), although nearly 60% remains at early stages, with 1.3 GW under execution and 1.6 GW in planning.
Capacity additions are estimated to accelerate to 300–350 megawatts (MW) per year during FY26 to FY28, compared with 150–250 MW per year over FY22 to FY25, aiming for a total capacity of 2.4 GW by FY28, up from 1.3 GW in FY25. Capital expenditure per information technology (IT) MW is Rs. 50–70 crore (US$ 5.8- 8.2 million), excluding land and managed services/cloud capex. Real estate accounts for 20% of DC's capex, with the remainder spent on mechanical engineering and related works. Capex inflation rose at a compound annual growth rate of 5–10% over FY21 to FY25, manageable due to rental escalations and long project timelines. However, workloads related to artificial intelligence (AI) are expected to increase capex substantially due to higher cooling and technology needs. Director India Ratings and Research Pvt Ltd, Mr. Prashant Tarwadi, noted rental growth is forecast at 3–5% annually, with capex inflation around 5–6%, barring supply chain or geopolitical disruptions. Hyperscalers like Google and Amazon pay Rs. 6,429- 7,286 (US$ 75-85) per kilowatt per hour monthly, while enterprise customers pay Rs. 8,143- 10,715 (US$ 95-125). AI-related demand is expected to reshape DC requirements, with significant investments underway globally in AI-ready facilities. Timely expansion of power infrastructure, especially in distribution, remains critical for supporting large DC parks in India.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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