According to a report by ICICI Securities, India is emerging as a major global destination for data centres as key international markets grapple with capacity constraints. The report said data centre markets in Europe, North America and parts of the Asia-Pacific region are facing severe structural bottlenecks, making it difficult to meet rising demand from artificial intelligence (AI) and hyperscale cloud providers.
India, by contrast, is currently among the least constrained markets for data centre development, with established global technology hubs reaching their physical limits, the report said, adding that the country offers an environment well-suited to rapid hyperscale deployment.
ICICI Securities noted that India retains over 10.5 gigawatts (GW) of capacity at the land-banking stage, providing long-term room to expand that European and American cities cannot match physically. Coastal metros remain key to this expansion, with Mumbai holding a 3.75 GW development pipeline and Chennai 1.36 GW, both serving as critical high-speed subsea cable landing gateways routing traffic between Europe, the Middle East and Southeast Asia. India is also expanding its subsea cable network from 18 to over 25 systems.
Policy measures are reinforcing this momentum. The report said the union budget 2026-27 has shifted India from a high-growth demand destination into a high-margin global operational hub, with eligible foreign cloud providers receiving an absolute tax holiday until 2047 on international revenues routed through India-based data centres, alongside a fixed 15 per cent cost-plus safe harbour margin for Indian operators servicing foreign entities.
Global capability centres (GCCs) are also acting as a structural driver of demand, with over 49 per cent of newly established GCCs being AI-first from inception, requiring 20-50 kilowatts (kW) per rack compared to the historical 5-8 kW, prompting a shift towards purpose-built, liquid-cooled colocation facilities. India now hosts 2,117 active GCCs and accounts for 45 per cent of the global GCC talent base.
Among the key risks flagged, power and water availability stand out. Data centre electricity consumption is projected to surge to 3 per cent of national usage by 2030, up from around 0.5 per cent today, while securing timely grid connectivity has become increasingly difficult, with 50 megawatt (MW) connections taking three to five years to secure in some markets. Water consumption is expected to more than double from 150 billion litres in 2025 to 358 billion litres by 2030, with over half of India’s data centres located in water-stressed regions.
Despite these constraints, the report noted that India retains meaningful cost and scale advantages, having the lowest dependence on the national electricity grid among the global top ten data centre markets, alongside strong cost competitiveness relative to other leading locations, aided by captive solar and wind capacity that helps bypass municipal grid shortages.
