India's Data Centres Boom: ₹1.6 Trillion Investment Projected in 5 Years

India’s data centre (DC) sector is expected to see investments between ₹1.6 trillion and ₹2 trillion over the next five to seven years, according to India Ratings and Research report. The growth is being driven by increased demand for digital infrastructure, particularly from cloud services and large enterprise clients.

Capacity Pipeline in Progress

Developers have announced 7.1 GW of planned DC capacity. Out of this, around 1.3 GW is currently under construction, while 1.6 GW is still in the planning stage. Nearly 60% of the pipeline remains at an early stage of development.

India’s total DC capacity stood at 1.3 GW in FY25. This is expected to reach 2.4 GW by FY28. The annual capacity addition is projected to rise to 300-350 MW during FY26-FY28, up from 150-250 MW per year in the FY22-FY25 period.

Cost Breakdown and Capex 

The average capital cost to build a data centre in India ranges from ₹50 crore to ₹70 crore per IT megawatt, excluding land and cloud-related expenses. Around 20% of the cost goes into real estate, while the rest is allocated to mechanical, electrical, and plumbing systems. Capex inflation grew at a 5-10% CAGR between FY21 and FY25.

AI-driven workloads are likely to raise capital expenditure due to higher cooling and processing needs. In other countries like the US, major DC REITs have already begun allocating funds for AI-ready facilities.

Read more: India’s Data Centre Capacity to Surpass 4,500 MW by 2030 with ₹2.13 Lakh Crore Investment!

Rental Rates and Client Pricing

As per the report, Rental rates are expected to grow at 3-5% annually. Hyperscale customers are currently paying between $75 and $85 per kilowatt per hour monthly, while enterprise clients are paying higher, between $95 and $125 for the same usage.

The expansion of power distribution systems will be important to support the planned growth of large-scale data centre parks across the country.

Conclusion

India’s data centre industry is on track for capacity expansion and increased investment. Execution timelines, cost management, and power infrastructure will be central to meeting future demand.

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