India’s data center capacity is projected to grow nearly four times, and will reach nearly **4 gigawatts (GW)** by FY30, according to a CareEdge Ratings report released on Wednesday. This expansion will open up potential investment opportunities of approximately **₹1.5 lakh crore**. The agency said that India currently has about **1.2 GW** of co-location data center capacity, which will be about **4%** of the global market in 2025. The capacity per million Internet users is only **1.2 MW**, which is much lower than the global average **5 MW**; This shows that there is considerable scope for expansion.
Rapid digitization, cost competition, cloud adoption and increasing demand for Artificial Intelligence (AI) workloads are driving tremendous growth in this sector. Co-location capacity doubled between FY22 and FY25, supported by strong consumption and an average utilization rate of over **90%**.
CareEdge estimates that industry revenues will grow at a compound annual growth rate (CAGR) of approximately **24%** during FY26–FY30, while EBITDA margins will remain stable at **40–42%**. While long-term contractual arrangements ensure strong revenue visibility and continuity of customers, on the other hand, debt levels are expected to remain high due to the ongoing high-capital expenditure (capex) phase.
Pooja Jalan, Director, CareEdge Ratings, said, “**The industry is going through a boom period**, characterized by high capex, strong support from sponsors and huge equity infusion.” He further said that AI-generated demand will drive growth, but having a reliable power infrastructure will be extremely important to harness the full potential of the sector.
The report also points out some of the challenges: Construction costs have increased by **50–70%** in recent years due to rising land prices, advanced cooling technologies and investments in renewable energy. The timeline for commissioning projects has also increased due to scope changes and regulatory delays.
Associate Director Tej Kiran noted that while current demand is led by enterprise IT and cloud storage, **AI workloads** will drive the next phase of expansion over the coming 5–7 years. Successful management of cash-flow amid rising costs will prove to be the key to sustained growth.
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