The data center market in India is growing rapidly. In the first six months of 2025, the total data center capacity in the country reached 1,123 megawatts. This is a significant increase of 48 percent compared to last year, driven by the growing demand for artificial intelligence (AI) and internet-enabled services. Demand is so high that data center vacancy now accounts for only 4.3 percent of the total space, significantly lower than before. Major real estate companies are also investing in this sector, making it a key component of the country’s digital development.
In India, Real Estate Investment Trusts (REITs) are now investing in data centers in addition to office construction. This shift has accelerated worldwide, and Indian companies are also changing their ways of working. Data center investments are considered secure, as companies rent space for long periods. This allows investors to generate consistent returns over a long period of time, eliminating the need to rely solely on office rent. This approach is being adopted worldwide and is now showing its impact in India.
Mumbai’s growing importance
Mumbai remains India’s largest data center hub, accounting for 54 percent of the country’s total capacity. With excellent internet access and cable network, companies prefer to locate their data centers here. India’s total capacity is expected to reach 2,073 megawatts by the end of 2027. Achieving this massive target will require approximately 17 million square feet of land and an investment of US$6.3 billion.
Data center technology is constantly evolving. India’s own cloud companies are now competing with large foreign companies and providing affordable services to consumers. Edge computing is also expected to double to 160 to 180 megawatts by 2028, further improving internet speeds. Neo-cloud companies are now offering GPU access to small companies and startups at affordable prices. This eliminates the need to purchase expensive machines, making their work easier.
Government regulations made work easier
Government and court decisions have further eased the path for this sector. The Supreme Court made a significant decision in August 2025, expediting environmental clearance for projects larger than 20,000 square meters. State-level committees are now approving these projects more quickly, enabling faster completion of data center construction. With increased demand and government support, this is a promising time for those working in this sector.