India's data centre capacity to grow to 2,000-2,100 megawatts (MW) by March 2027: ICRA

India’s data centre (DC) operational capacity is projected to increase from 1,150 megawatts (MW) in December 2024 to 2,000-2,100 MW by March 2027, driven by rising data usage and data localisation initiatives, according to rating agency ICRA. Indian DC operators are expected to invest Rs. 2,00,000-2,30,000 crore (US$ 22.91-26.34 billion) in expansion, with a development pipeline of 3-3.5 gigawatts (GW) set for completion over the next seven to 10 years. The report highlights that 75% of upcoming facilities will be concentrated in Mumbai, Chennai, and Hyderabad, with Mumbai emerging as the preferred location due to its high number of landing stations.

ICRA noted hyperscalers drive demand, with global trends indicating multiple 300 MW plus deals signed for artificial intelligence (AI) workloads. Growth is also fueled by cloud computing, 5G rollout, machine learning, and the Internet of Things (IoT). While co-location services account for 80-85% of DC revenues, increasing developer competition has moderated rental rates. With the number of DC developers rising from five in 2019 to 18 in 2025, hyperscalers now hold greater negotiating power, impacting return on investment and payback periods in the medium term. ICRA expects favourable regulatory policies and infrastructure status for the DC sector to support sustained growth over the coming decade.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.