India Data Centre Capacity to Reach 12 GW by 2030 as AI, Digital Economy Drive Power Demand

India’s operational data centre capacity is projected to rise from 2.2 GW in 2025 to 12 GW by 2030, registering a compound annual growth rate of about 40 percent, according to new research by Wood Mackenzie.

The report, 'India’s Data Centre Landscape: Powering the Digital Economy', said that AI dedicated data centre capacity is expected to expand nearly 24 fold during the same period, increasing from 275 MW to 6,546 MW. The growth is being driven by hyperscale cloud providers, enterprise digitalisation and rising artificial intelligence workloads.

Wood Mackenzie forecasts that data centre electricity demand in India will grow 20 fold by 2040, rising from 10 TWh in 2025 to account for 7 percent of the country’s total electricity demand. The country’s digital economy, valued at INR 32 trillion in 2025 and contributing around 12 percent of GDP, is supported by more than 1.03 billion active internet users and approximately 22 billion UPI transactions each month.

Maharashtra and Tamil Nadu currently account for around 65 percent of India’s installed IT load. However, the next phase of data centre investment is expected to expand across Andhra Pradesh, Telangana, Uttar Pradesh and Karnataka, with commitments from global hyperscalers such as Amazon Web Services and Google, as well as domestic operators including AdaniConnex, which has announced a 2.6 GW development pipeline.

The report said that reliable and cost competitive power has emerged as the defining factor in data centre development, overtaking land and capital as the industry's primary constraint. Captive generation and long term renewable power purchase agreements are increasingly becoming preferred procurement strategies, helping developers reduce operating costs while supporting decarbonisation goals.

Water availability is also emerging as a strategic investment risk, particularly as AI workloads increase rack densities and cooling requirements. Markets such as Tamil Nadu and Karnataka could face greater pressure due to water constraints. Wood Mackenzie noted that closed loop cooling and zero liquid discharge technologies could help developers reduce freshwater consumption and prepare for potential future regulations.

The report concludes that India's strong digital demand, supportive policies, growing renewable energy markets and rapid AI adoption are creating one of the world's fastest growing data centre markets. However, securing reliable power, managing water resources and selecting resilient locations will increasingly determine the sector's long term growth.