India data centre capacity to jump 30% in 2026

India’s data centre market is moving into a new phase

India’s data centre sector is shifting from a niche real estate and infrastructure play into a high-growth asset class across Asia-Pacific. Operational IT load capacity stood at about 1.3–1.53 GW in early 2026, up from around 1.2 GW in 2024. Record supply additions in 2025, estimated at 260–387 MW in one set of estimates, have reinforced the pace of build-outs. CBRE’s India Alternate Sectors Outlook 2026 adds another datapoint, stating that the country’s total data centre capacity reached about 1,700 MW in 2025, driven by a record 440 MW of new supply. With demand drivers expanding from cloud to AI, energy planning and policy certainty are becoming central to execution.

2026 supply outlook: ~30% YoY stock growth

CBRE projects India’s data centre stock across major cities to grow by around 30% year-on-year in 2026. The report pegs expected new supply at about 500 MW for the year. Consensus forecasts cited in the broader sector assessment project capacity reaching 1.7–2.0 GW by end-2026, described as roughly a +30% YoY supply increase. Together, these estimates point to a market where delivery timelines, power availability, and land readiness will determine how quickly committed capital translates into operational capacity.

Valuations and market size: $1–10 billion today, $12 billion by 2030

Market valuations mirror the sector’s growth profile. The overall data centre market is valued at about $1–10 billion in 2025, while infrastructure-related segments are valued at about $18.5 billion. Looking ahead, market size is expected to more than double to $12 billion by 2030, implying a CAGR of about 14–15%. Infrastructure spending could scale toward $10 billion by 2032, with an 11.3% CAGR cited in forecasts. These numbers place data centres among the more visible beneficiaries of India’s broader digital infrastructure expansion.

Investment commitments: $126 billion cumulative, led by hyperscalers

Investment commitments to India’s data centre sector exceeded $126 billion cumulatively, with $16.4 billion deployed in 2025 alone. CBRE expects these commitments to rise by about 45% in 2026, potentially crossing $180 billion. Hyperscaler pledges highlighted in late 2025 total about $17.5 billion, split between Microsoft ($17.5 billion), Amazon ($15 billion), and Google ($15 billion). The concentration of such pledges matters because hyperscalers influence not just leasing demand but also design standards, power density requirements, and the shift toward AI-ready capacity.

Geography is widening: tier-II cities gain attention

The investment landscape is expanding beyond the top metro markets. Driven by lower-latency requirements, the 5G rollout and data localisation needs, operators are directing more investment toward tier-II cities such as Ahmedabad, Visakhapatnam, Patna and Bhopal. On capital inflows, Telangana, Maharashtra, Andhra Pradesh, Tamil Nadu and Uttar Pradesh are expected to lead. This shift broadens the set of operational constraints, particularly around grid quality, right-of-way for fibre, and the availability of reliable renewable power procurement options.

Policy pivot: 20-year tax holiday for foreign cloud providers

A key policy development is the Union Budget 2026–27’s 20-year tax holiday, extending until 2047, for foreign cloud providers serving global customers using Indian facilities. The sector assessment argues this provides fiscal certainty that can lower the cost of capital and reduce cross-border structuring risk. It also frames the measure as fiscally efficient, with foregone revenue potentially offset through multipliers such as FDI inflows and capex-linked construction activity. The same assessment references potential additional construction activity of $10–25 billion by 2030.

Sovereignty-linked demand: Digital India and AI Mission

Government priorities around data sovereignty also reinforce local infrastructure requirements. The assessment references government capex of about $1.5 billion allocated and the India AI Mission of INR 100 billion (INR 10,000 crore), with mandates that support local build-outs. Separately, the same policy note suggests data centres could add 0.5–1% to GDP indirectly via productivity gains in sectors such as BFSI, e-commerce and AI services. It also links domestic capacity to balance of payments outcomes by reducing reliance on foreign cloud infrastructure and positioning India as a net exporter of digital infrastructure services.

Energy becomes the binding constraint as capacity scales

The sector’s scale-up is increasingly tied to energy strategy. India’s 500 GW non-fossil target by 2030 is described as aligning with data centres’ growing power needs, especially if projects can anchor corporate power purchase agreements (PPAs). The assessment notes that 40% of global renewable energy PPAs in 2025 came from technology companies, highlighting how large digital buyers can shape renewable procurement. For investors and operators, the guidance in the note is to prioritise renewable-tied sites, performance-linked state incentives, and AI-ready hyperscale designs.

Capex backdrop: AI, defence and grid upgrades

The data centre build-out is occurring alongside a broader capex narrative. Morgan Stanley’s Chetan Ahya flagged AI infrastructure spending, rising defence expenditure, and energy transition-related grid expansion as structural drivers of a new capex wave. Morgan Stanley also said the FY27 Budget backs growth through manufacturing, services support, and an emphasis on capex, noting total capex set to rise 11.5% year on year and defence capex up 18%. It added capex as a share of GDP remains steady at 3.1% in FY27, similar to FY26 revised estimates, and pointed to measures such as tax breaks for data centres and higher safe harbour limits.

Key numbers at a glance

Market impact: what changes for investors and operators

The immediate market impact is a larger development pipeline across more locations, increasing the premium on execution capabilities. The sector note argues tax certainty can lower WACC by an estimated 200–400 bps, citing global precedent qualitatively, which can improve project IRRs and accelerate deployment. CBRE’s projection of ~500 MW new supply in 2026 suggests supply is becoming less sporadic and more programmatic, with repeatable capacity releases. At the same time, the move into tier-II cities implies more variance in power quality and permitting readiness, pushing operators to build stronger local utility coordination. Renewable sourcing is becoming a core underwriting item as power costs and availability influence site selection and long-term competitiveness.

Why the story matters: scale scenarios through 2030 and beyond

Forecasts cited in the assessment show multiple scale paths: 4–5 GW by 2030 in base cases and 8–9.2 GW in AI-accelerated scenarios, with some bullish projections extending to 13.5 GW by 2032. The outlook section argues India is positioned to capture 4–5% of global capacity additions between 2026 and 2032. It adds that realising 8–9 GW sustainably could unlock $100 billion-plus investments and create tens of thousands of high-skill jobs, while cautioning that execution of the “energy playbook” is the difference between boom and bottleneck.

Conclusion: policy certainty is in place, delivery is the test

India’s data centre story entering 2026 combines fast supply growth, large investment commitments, and a significant policy signal via a 20-year tax holiday framework extending to 2047. The next set of milestones will be visible in actual supply delivery, renewable procurement progress, and the pace at which new geographies scale beyond the metros. With forecasts ranging from 4–5 GW by 2030 in base scenarios to 8–9.2 GW under AI-accelerated assumptions, the market’s direction is clear, but outcomes will depend on power, grid readiness, and build execution.