India’s data centre industry is expected to surge from 1.6 GW as of June 2026 to 6 GW by 2029, requiring about $110 billion in capital and driven by AI workloads and hyperscale cloud deployments, a report said on Wednesday.
India data centre capacity expected to reach 6 GW by 2029
The report from JLL said the sector recorded 101 MW of absorption in the first half of 2026, exceeding the three-year H1 average by more than 20 per cent.
Supply remained robust with 85 MW delivered during the period, primarily concentrated in Mumbai and Chennai. Accelerated pre-committed deliveries have driven vacancy levels to a record low of 2.8 per cent, reflecting exceptional market fundamentals.
Hyperscale investments reshape India’s data centre market
“India’s data centre landscape is undergoing a fundamental transformation unprecedented in scale and ambition. The convergence of landmark tax incentives with massive hyperscale investments for AI-driven infrastructure requirements positions India as a strategic global hub for digital innovation.” said Rachit Mohan, Managing Director, Data Centre Leasing, APAC, JLL.
He added that the country is witnessing the creation of an entirely new digital infrastructure ecosystem that will reshape India’s technology landscape and drive economic growth for decades.
Global hyperscalers are fundamentally reshaping the market dynamics by committing to building nearly 30 per cent of new capacity through self-build facilities.
Hyperscale self-build is expected to deliver 1.4 GW by 2029, with major investments transforming locations like Hyderabad and Visakhapatnam into gigawatt-scale hubs alongside established markets like Mumbai and Chennai.
Tax incentives accelerate data centre investments
The recent Union Budget’s announcement of 20-year tax holiday for foreign cloud service providers, extended until March 31, 2047, has dramatically accelerated investment commitments.
This policy has attracted over $50 billion in foreign capital commitments and the initiative positions India as a global hub for routing global AI and cloud services while de-risking long-term capital deployment.
$110 billion investment needed for India’s data centre expansion
The expansion demands $4 billion for real estate construction, $18 billion for mechanical, electrical, and plumbing infrastructure, along with $88 billion for IT equipment including servers and racks.
The development of Small Modular Reactors (SMRs) by 2033 offers future potential for off-grid power solutions for large data centre campuses, the report noted.
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