India's data centre boom gathers pace as AI, cloud investments fuel digital infrastructure growth

India's digital transformation is emerging as one of the key pillars of economic growth, technology adoption, and global competitiveness, with the country's digital economy projected to reach $1 trillion by 2030, a report has said. The rapid proliferation of digital payments, e-commerce platforms, cloud services, artificial intelligence applications, and online public infrastructure is generating massive volumes of data and sharply increasing demand for computing capacity, according to The Ayeyarwaddy Times report. The country's technology ecosystem continues to expand at a rapid pace. India's IT and business services market reached $69 billion in FY26, while nationwide IT spending is expected to climb to $176.3 billion in 2026. Industry estimates suggest the software products sector could exceed $100 billion by 2030, supported by growing adoption of cloud computing, AI, data analytics, and digital services across industries, as per the report. At the heart of this transformation lies the data centre industry, which has evolved from a back-end support function into a critical component of digital infrastructure. Data centres now serve as the foundation for cloud platforms, digital payments, enterprise software, streaming services, and AI-powered applications. India currently has around 271 operational data centres with an installed capacity estimated between 1.57 GW and 1.79 GW. According to industry projections, data-centre capacity could double over the next two years and may increase as much as five-fold by 2030 as demand for digital services accelerates. Mumbai remains India's largest data-centre market, accounting for roughly 650 MW of installed IT capacity. The city has emerged as a preferred destination for data-centre investments due to competitive power costs, strong connectivity infrastructure, and access to international submarine cable networks. Other major hubs include Chennai, Delhi-NCR, Bengaluru, Hyderabad, and Kolkata, which together host the bulk of the country's operational capacity, the report stated. The sector is attracting significant investments from both global technology companies and Indian conglomerates. Amazon, Google, and Microsoft are expanding their data-centre footprints across the country to support growing cloud and AI demand, the report noted. Among the most notable projects is Google's proposed $15 billion investment in a one-gigawatt data-centre hub and hyperscale ecosystem in Visakhapatnam, which is expected to become one of the company's largest facilities outside the United States. The project is also expected to support the development of the proposed AI City initiative in Andhra Pradesh.