The Indian data centre market is witnessing strong momentum, driven largely by accelerating digitalisation, rapid adoption of artificial intelligence (AI) and sustained investment interest, supported by a steadily evolving policy environment. The segment is also entering a new build phase, as operators begin preparing for higher density, AI-ready capacity, which is reshaping decisions on design, power and cooling, and ecosystem partnerships. The Digital Personal Data Protection (DPDP) Act is moving closer to active enforcement, and energy and sustainability priorities are becoming more central to project planning. In this context, industry leaders share their views on the key developments in the past year, policy expectations and gaps, power and green energy initiatives taken, and strategic priority areas for the future…
What were the most significant developments in the data centre space during 2025?
Seema Ambastha
The year 2025 marked a structural shift for the data centre industry in India, moving decisively from capacity expansion to capability-led infrastructure development. The most significant development was the rapid rise of AI-driven workloads, which fundamentally changed how data centres are designed and operated, from power density and cooling architectures to network design and operational resilience.
Equally important was the growing emphasis on data sovereignty and regulatory readiness. As digital adoption accelerated across government, banking, financial services and insurance (BFSI), healthcare and other regulated sectors, infrastructure decisions increasingly prioritised data residency, governance and compliance by design. Data centres are now recognised as strategic national digital infrastructure, and not merely as backend facilities.
At Larsen & Toubro-Vyoma, these trends are reflected in our AI-ready data centre footprint, including our campus at Sriperumbudur, Chennai; and our expansion in Navi Mumbai, where we recently commenced development of a 40 MW green, AI-ready facility at Mahape, the first phase of a planned 100 MW campus. These investments reflect the industry’s evolution towards high-density, secure and future-ready digital infrastructure.
Anil Nama
The year 2025 was a pivotal year for data centres, driven by the rise of AI workloads and policy support. Power density, load profiles and thermal management became critical design priorities. Industry, including CtrlS Datacenters, shifted from incremental capacity to AI-ready infrastructure, with scalable power, advanced cooling and resilience. Facilities are now built for high-density and continuous AI workloads and the focus has shifted from capacity to intelligent design, powering and operation.
The industry is focused on sustainability, policy and geographic distribution. The sector has shifted from intentions to active sourcing of renewable energy, with operators securing long-term supply agreements and exploring captive generation. CtrlS led by commissioning GreenVolt1, India’s first captive solar farm, to supply renewable energy to our Mumbai campus and integrate green energy into our site selection. Government policies such as data localisation under the DPDP framework and state-level rules reshaped deployment, boosting investments beyond metros. The increased adoption of 5G networks increased the demand for low-latency, localised computing boosting edge data centres.
Rohan Sheth
The year 2025 marked a shift in the data centre industry, from scale-driven expansion to capability-driven growth. Hyperscalers globally ramped up AI-related capex, triggering a new development wave, where power availability, grid readiness and land with substations became key factors. Around 75 per cent of the new facilities are now being designed for AI workloads, making liquid cooling and renewable energy integration a practical requirement rather than an optional upgrade.
Governments and enterprises prioritised sovereign cloud and AI infrastructure to store data and models domestically, influenced by evolving regulations, geopolitical uncertainties and national digital strategies. AI demand also moved from general-purpose compute to industry-specific applications across sectors such as BFSI, healthcare and retail, driving a need for more specialised infrastructure.
In India, the market crossed 1 GW in capacity, entering a rapid growth phase fuelled by AI, cloud adoption, 5G-driven edge demand and data localisation needs. The policy environment matured with the notification of the DPDP Rules, 2025, and a clearer pathway emerging for data centre policy, approvals and green mandates.
What is the industry’s strategy for managing the transition from traditional storage hubs to high density AI-ready data centres, while balancing the massive cost premium of AI-ready infrastructure?
Seema Ambastha
The transition to AI-ready data centres represents one of the most capital-intensive and technically complex shifts that the industry has undertaken. AI workloads introduce significantly higher demands on power, cooling and network performance, making cost discipline and design efficiency critical.
The industry’s response has been a phased, modular and workload-aligned strategy. Rather than speculative overbuilds, operators are now designing facilities that can scale density incrementally as demand matures. This includes higher rack densities, graphic processing unit (GPU)-ready layouts and advanced cooling approaches such as liquid and hybrid cooling, which improve efficiency at scale.
Hybrid and sovereign cloud architectures are also playing a central role, enabling enterprises to selectively deploy AI workloads, while balancing performance, compliance and the total cost of ownership. At Larsen & Toubro-Vyoma, AI readiness is approached holistically, combining hyperscale-ready data centre design, GPU-enabled infrastructure and sovereign cloud platforms to deliver performance, resilience and governance without compromising efficiency.
Anil Nama
The industry is transitioning from traditional data centres focused on storage to AI-ready infrastructure by adopting a practical, hybrid strategy. Instead of completely replacing existing facilities, operators keep legacy systems for suitable enterprise and storage workloads, while developing new, purpose-built campuses for AI tasks. This workload segmentation enables organisations to leverage existing assets, while investing more in facilities that support high-density compute. Modular and phased deployment is essential, allowing capacity to expand as needed and helping manage the higher costs associated with AI-ready infrastructure.
Managing that cost premium requires disciplined planning across power, cooling and operations. Securing reliable energy and water has become as crucial as securing land, while newer facilities are being designed with advanced cooling technologies to handle higher densities efficiently. Designing these capabilities from the outset avoids costly retrofits as requirements evolve. This enables the industry to move towards AI-ready data centres, while maintaining financial discipline and supporting long-term objectives.
Rohan Sheth
The shift from traditional data centres to AI-ready infrastructure is being managed very deliberately, recognising that AI workloads come with higher power, cooling and design requirements. Rather than upgrading entire facilities, the industry is moving away from a one-size-fits-all model and adopting a segmented, phased approach. Traditional air-cooled halls continue to serve storage and lower-density enterprise workloads, while new campuses or dedicated zones within existing campuses are designed as high-density AI pods.
To manage the cost premium, operators are aligning capital deployment closely with contracted demand, building AI capacity in modular blocks and future-proofing facilities so that they can scale without overbuilding. This approach is especially important in India, where data centre capacity is expected to grow four times by 2030 on the back of cloud adoption, data localisation and AI demand. At the same time, commercial models are evolving – GPU-as-a-service, managed AI platforms, and longer-tenor contracts help improve predictability and offset higher upfront costs, making AI-ready infrastructure economically sustainable.
As the DPDP Act moves from policy to active enforcement in 2026, what impact will it have on the industry? Is there any support that the industry needs from the government to ensure compliance?
Seema Ambastha
The enforcement of the DPDP Act in 2026 will be a defining moment for India’s digital infrastructure ecosystem. The act reinforces the need for data residency, accountability, auditability and controlled access, particularly for organisations handling personal and sensitive data.
For the data centre industry, this necessitates a shift towards compliance-by-design, where infrastructure is architected to meet regulatory requirements from inception rather than through retrofitting. This is accelerating the adoption of sovereign cloud platforms, where data, operations and governance remain firmly under Indian jurisdiction.
From a policy perspective, continued collaboration between industry and government will be important, particularly around implementation guidelines, certification frameworks and transitional timelines. Clear and pragmatic frameworks will help ensure strong compliance, while enabling innovation and scale. Larsen & Toubro-Vyoma’s sovereign cloud infrastructure is designed to support DPDP-aligned workloads, enabling enterprises and public sector institutions to meet regulatory obligations with confidence.
Anil Nama
As the DPDP Act shifts from policy to active enforcement in 2026, its influence on the data centre sector will become imminent. The emphasis will move from just intended policies to clear actions, including data management, security measures, breach handling and accountability. Although the act does not enforce blanket localisation, it notably underlines the need for local infrastructure in critical areas such as financial services, healthcare and government, while aligning both international and regional operators under a unified compliance standard. This necessitates security maturity, continuous monitoring, thorough documentation and audit preparedness, turning compliance from a mere legal requirement into a vital part of the operations.
To facilitate smooth and efficient compliance, the ongoing government support remains vital in key areas. Providing clear, timely guidance on data classifications, cross-border data transfers and upcoming obligations would help operators confidently plan their infrastructure and network capacity. Aligning national DPDP requirements with sector-specific or state-level regulations would reduce complexity, especially for operators with multi-state operations. Developing recognised technical standards, certification processes and capacity-building programmes can set consistent benchmarks and bridge skill gaps in privacy engineering and compliance management. Implementing a balanced, consultative enforcement approach at the early stages can foster ecosystem growth without blocking digital progress and encourage accountability and trust.
Rohan Sheth
As the DPDP Act moves into an active regulatory phase in 2026, the biggest near-term impact will be behavioural rather than purely punitive. Enterprises in the BFSI, telecom and healthcare segments, and digital platforms will require infrastructure partners that can support compliance, including data residency assurance, auditable security controls, breach response workflows and stronger processor clauses. Even though primary obligations sit with data fiduciaries, cloud providers will be evaluated on whether they enable compliant architectures and provide the platforms that customers need for regulator readiness.
Industry support needed from the government would be clear timelines and regulatory frameworks to support operational planning and help reduce ambiguity around compliance expectations. First, early, stable guidance on cross-border transfer rules and any restricted jurisdictions will prevent fragmented interpretations. Second, model templates and codes of practice for processor contracts, security safeguards, breach reporting interfaces and audit expectations would reduce compliance friction, especially for mid-market companies. Third, capacity-building toolkits for micro, small and medium enterprises, and harmonisation guidance across sector regulators can reduce duplicated effort and any contradictory requirements while keeping India’s digital growth on track.
What initiatives is the industry taking for better power management and transitioning towards green energy?
Seema Ambastha
Power management and sustainability have become central to the future of the data centre industry, especially with the rise of AI-driven compute. The industry is responding through energy-efficient design, intelligent power management systems and increased adoption of renewable energy.
Advanced cooling technologies, including liquid and hybrid cooling, are enabling higher efficiencies at increased rack densities, while improvements in electrical design and monitoring are optimising power utilisation. At the same time, operators are integrating renewable energy sourcing and low-carbon operational practices into their long-term infrastructure strategies.
At Larsen & Toubro-Vyoma, sustainability is embedded across our entire data centre portfolio. Our facilities are designed with power usage effectiveness (PUE) targets aligned to global efficiency benchmarks, resilient power architectures and high-efficiency cooling systems, enabling performance at scale without disproportionate energy overheads. The Mahape facility builds on this foundation with next-generation cooling and low-carbon design principles, reinforcing our commitment to responsible and sustainable digital growth.
Anil Nama
The industry is increasingly prioritising power management and the shift to green energy, driven by scaling factors and accountability. Companies are combining long-term renewable purchases, captive generation and hybrid sourcing with battery energy storage systems to stabilise intermittent renewables and reduce dependence on fossil fuel backup. On the demand side, advanced cooling technology, real-time monitoring and tighter integration of power and cooling are enhancing efficiency. Performance assessments now extend beyond PUE to include metrics such as carbon and water intensity. Additionally, sustainability governance has advanced, with many organisations incorporating energy and environmental goals into executive KPIs and board oversight, marking a move from intent to action.
These trends increasingly influence how infrastructure is planned and operated. Renewable energy and storage are now integral to site selection and campus design rather than being added post construction. For example, CtrlS has implemented a captive solar initiative with GreenVolt1 to supply renewable energy to its Mumbai campus, signed a strategic MoU with NTPC Green Energy to develop large-scale renewable energy capacity and adopted measures to improve energy and water efficiency across its facilities, resulting in better PUE performance. These initiatives show how green energy, efficiency and resilience are becoming central to infrastructure strategy, supported by policies, incentives, clearer frameworks for energy storage and recognised certification standards to validate performance.
Rohan Sheth
Power management and the transition to green energy have become central to data centre strategy, especially as AI-driven workloads significantly increase energy intensity. The industry is responding through a combination of technology, procurement innovation and policy-led operating changes.
First, operators are deploying advanced cooling technologies within facilities. This includes a wider adoption of liquid cooling for high-density AI workloads, AI-driven energy management systems and high-efficiency electrical design to materially improve PUE. For standard enterprise loads, tighter airflow management and optimised cooling layouts continue to deliver gains, while closed-loop liquid systems also help reduce water consumption and improve overall sustainability.
Second, renewable energy sourcing is scaling rapidly. Long-term power purchase agreements, and captive solar and wind projects are increasingly being structured to support round-the-clock supply. This shift improves both cost predictability and carbon outcomes.
Finally, the broader operating model is evolving. Regulatory support for open access, power wheeling and simplified green energy procurement is allowing data centres to source renewable power flexibly. Collectively, these initiatives enable the industry to secure reliable, competitively priced power while meeting environmental, social and governance expectations.
What will be your primary focus areas and strategic priorities for 2026?
Seema Ambastha
Looking ahead to 2026, the data centre industry will move decisively from incremental expansion to purpose-driven scale, where infrastructure growth is tightly aligned with AI adoption, regulatory certainty and long-term sustainability. The focus will be on building platforms that are not only powerful and scalable, but also trusted, compliant and resilient by design.
At Larsen & Toubro-Vyoma, our priorities are centred on deepening sovereign cloud capabilities, scaling AI-ready and high-density data centre infrastructure, and advancing integrated platforms that enable secure, policy-aligned digital transformation for enterprises and public sector institutions. We see sovereign, AI-enabled infrastructure as foundational to India’s digital future, supporting everything from enterprise innovation to national digital missions.
Equally critical will be continued investment in operational excellence, cyber resilience and governance frameworks, ensuring that infrastructure remains dependable as workloads become more complex and mission critical. As digital systems increasingly underpin economic growth and institutional trust, India-first, sovereign, AI-ready data centre infrastructure will play a defining role in shaping the country’s next phase of digital progress.
Anil Nama
In 2026, we will prioritise expanding AI-ready infrastructure across India and boosting regional resilience. We will expand in major metropolitan regions and accelerate deployments in Tier II and Tier III cities to support latency-sensitive workloads and data localisation. Developing data centre parks in Hyderabad will provide campus-scale capacity designed for higher densities, advanced cooling and long-term operational growth. This approach shifts from gradual expansion to strategically planned, future-proof infrastructure that adapts to evolving workload needs. Also, massive expansion at our Mumbai data centre campus will meet the surge in demand.
We will also focus on integrating sustainability, resilience and operational maturity into our building and operational practices. We plan to strengthen long-term renewable energy sourcing through more captive generation and strategic alliances, supported by energy storage and improved grid coordination, so that green power influences site selection and design decisions. Focusing on efficiency and water stewardship, our new facilities aim to improve PUE and water usage effectiveness. Simultaneously, continued investments in talent and operational controls will support reliability, security and scalability as the business expands.
Rohan Sheth
For 2026, Yotta’s priorities are centred on scaling AI infrastructure while accelerating the shift toward accessible AI platforms. The first pillar is AI readiness at scale by expanding the data centre footprint, power and fibre-dense infrastructure, GPU capacity and ensuring data centres remain future-proof for next-generation workloads through industry-leading PUEs and efficient, high-density design.
The second pillar is democratising access to AI. Through GPU-as-a-service, managed orchestration and platforms such as Shakti Cloud and Shakti Studio, Yotta is lowering barriers to AI adoption for enterprises, start-ups, researchers and institutions. These platforms enable customers to focus on building, training and deploying models, particularly inference workloads, without the complexity of owning or managing underlying infrastructure.
Finally, ecosystem development remains critical. By offering affordable, sovereign and globally competitive AI infrastructure, and by partnering with independent software vendors, start-ups, academia and government, Yotta aims to ensure that more of India’s AI innovation is trained, deployed and governed on Indian infrastructure, aligned with global performance, security and compliance standards.
