India data centre boom: $280bn AI opportunity by 2035

Why India’s data centre story is accelerating

India’s data centre industry is being positioned as a key enabler for cloud computing, artificial intelligence (AI), and the broader digital economy. PwC India said the AI boom could create a $180-billion ecosystem opportunity by 2035. The sector is seeing rising interest from global and domestic investors as India’s digital transformation expands the amount of data generated and processed. The demand base is also widening beyond metros as 5G and edge computing use cases grow. Several estimates and policy signals in the public domain now point to a multi-year build-out phase.

Demand drivers PwC India highlighted

PwC India pointed to rapid digitisation across the economy as a core driver of data-centre demand. Factories are becoming smarter, digital payments are increasing, and enterprises are processing more data than before. Global capability centres (GCCs) were also flagged as a major source of incremental demand. The same commentary linked the trend to AI adoption, cloud migration, and hybrid cloud deployments. Data localisation requirements and the digitisation of government and enterprise services were also listed as structural tailwinds.

Why global investors are looking at India

India is increasingly being viewed as a destination where infrastructure for cloud and AI can be built at scale. Geography is one factor cited, with India located between Europe, the Middle East and Southeast Asia. That positioning is seen as strategically important for global internet connectivity. The broader argument is that connectivity, growing domestic demand, and the ability to add capacity quickly are bringing India into the shortlist for large digital infrastructure deployments.

Large investment plans announced so far

Multiple large-ticket investment plans have been outlined for the sector and related infrastructure. AirTrunk has proposed investments worth Rs 3 lakh crore by 2030, focused on cloud computing, AI infrastructure and data centres. Reliance has announced plans to invest $110 billion. Adani has outlined investments of $100 billion in renewable-powered AI-ready data centres and related infrastructure by 2035. These announcements sit alongside a wider pipeline of planned projects that various reports describe as exceeding $10 billion over the next five to seven years.

Capacity build-out targets and what they imply

India is described as being in one of the world’s fastest-growing infrastructure build-outs, driven by AI and cloud adoption. Within India, data centre capacity is set to triple by 2030, supported by government policies, rising domestic demand, and external investment. Another estimate in the material projects capacity rising from 1 GW to 9 GW. A separate base case projection cited for FY30 pegs data centre capacity at about 5 GW, with an additional 2 to 3 GW of AI-focused data centre capacity announced in the last 6 to 9 months, which could take roughly 2.5 to 3 years to construct. While these figures come from different estimates, they collectively point to a sharp step-up in planned capacity.

Policy signals: tax incentives and data localisation

The Union Budget 2026-27 is cited for a 20-year tax holiday, until 2047, for foreign cloud providers serving global customers using Indian facilities. The same policy is described as providing fiscal certainty that could lower the cost of capital and reduce structuring risk for cross-border investments. The Digital Personal Data Protection Act 2023 is referenced as reinforcing data localisation, which supports India’s AI ecosystem and, by extension, the need for domestic infrastructure. The combination of tax incentives and localisation requirements has been framed as a key part of the investment case.

Market size, spending outlook, and operating metrics

The sector is described as having moved from a nascent market to a high-growth asset class in Asia-Pacific. Market size is expected to more than double to $12 billion by 2030, with a CAGR of around 14-15%. Infrastructure spending could scale toward $10 billion by 2032 at an 11.3% CAGR. Prime markets are cited as seeing high utilisation of more than 90-95%, and stable EBITDA margins of 40%+ for operators. Separately, AI and high-performance computing (HPC) workloads are described as pushing dense power requirements, with campuses needing up to 100 MW+.

Data usage growth and what is driving it

India’s data consumption is cited as having risen from 8 exabytes in FY17 to 229 exabytes in FY25. The drivers listed include OTT platforms, digital payments, social media and ecommerce. One estimate also says that by FY30, consumption could reach 50GB of data a month, driven by increasing smartphone penetration, increasing 5G penetration, and increased use of AI tools. These usage trends are central to why capacity additions are being planned across cloud, colocation, and AI-focused deployments.

What the government has said about the investment pipeline

Electronics and IT Minister Ashwini Vaishnaw has cited significant investments already underway. In remarks referenced in the material, he said around $10 billion is already underway in India, with announced investments touching $10 billion as well. He added that he expects the figure to exceed $100 billion in the coming months. In another statement, he said the government expects investment in data centres to cross $100 billion, about ₹18.33 lakh crore, and that nuclear energy will be an important component to power the ecosystem. He described nuclear power as clean power needed for the long-term sustenance of the AI economy.

Key numbers at a glance

Market impact: what these trends change for investors

A larger and faster build-out can reshape capex cycles across power, real estate, connectivity, and equipment supply chains tied to data centres. The article’s figures also highlight how policy measures, such as the tax holiday until 2047, can affect long-term project economics for foreign cloud providers using Indian facilities. Data localisation requirements linked to the Digital Personal Data Protection Act 2023 add a regulatory dimension to demand, particularly for enterprise and government workloads. For operators, the cited utilisation level of more than 90-95% in prime markets and EBITDA margins of 40%+ frame the sector as operationally attractive, subject to execution and power availability. Separately, the minister’s emphasis on nuclear power underscores that energy sourcing is becoming a core part of the investment narrative.

Analysis: why AI is changing data centre design

The shift toward AI and HPC workloads is tied to higher-density computing requirements, including GPU clusters. The text cites campuses that can require up to 100 MW+ of power, which changes site selection, grid planning, and cooling design compared to traditional enterprise data centres. A second change is the mix of demand, with cloud migration, hybrid cloud deployments, and government digitisation all running in parallel. And the third is the expanding footprint, with 5G, IoT, and edge computing mentioned as drivers beyond Tier-I markets. These factors, taken together, explain why investors are announcing multi-year plans rather than incremental expansions.

Conclusion

India’s data centre build-out is being driven by AI adoption, cloud demand, data localisation rules, and policy incentives that improve long-term project visibility. PwC India’s $180-billion ecosystem opportunity estimate for 2035, alongside capacity and investment projections cited by the government and industry, sets the context for a sustained investment cycle. The next milestones to watch will be how announced investments translate into commissioned capacity, and how power planning evolves, including the role of nuclear energy referenced by the IT minister.