India is witnessing an acceleration in data centre investments as the country’s largest business groups and global technology players ramp up capacity to support the next phase of digital growth. From cloud computing and artificial intelligence to 5G-enabled applications, demand for reliable, large-scale data infrastructure is reshaping capital allocation decisions across corporate India and drawing in long-term global investors.
Among the most significant announcements is Digital Connexion’s plan to invest $11bn by 2030 to develop a major data centre campus in southern India. Digital Connexion is a joint venture between Reliance Industries(NSE: RELIANCE), Brookfield Asset Management and US-based Digital Realty Trust, combining domestic scale with global expertise in digital infrastructure. The project underlines Reliance’s broader strategy of building end-to-end digital ecosystems while leveraging international capital and operational capabilities.
Adani Group(NSE: ADANIENT) is also stepping up its presence in the sector. Through Adani Enterprises’ joint venture AdaniConneX, the group has partnered with Google to develop what is being positioned as India’s largest AI-focused data centre campus along with associated green energy infrastructure in Visakhapatnam, Andhra Pradesh. Google’s planned AI hub in Visakhapatnam represents an investment of about $15bn over the five-year period from 2026 to 2030 and is designed around gigawatt-scale data centre operations. The project highlights the growing convergence between data centres, artificial intelligence workloads and renewable energy, as hyperscalers increasingly prioritise sustainability alongside scale.
These investments are part of a broader industry upswing. According to a recent Crisil assessment, the annual revenue of India’s data centre operators is expected to reach around INR200bn ($2.2bn) by fiscal 2028. This implies a strong annual growth rate of 20–22%, supported by rising digital consumption among enterprises and retail users, increased cloud adoption and expanding data-intensive applications across sectors such as finance, e-commerce, healthcare and media.
To cater to this buoyant demand, the industry’s installed capacity is projected to almost double over the next few years, reaching about 2.3–2.5 gigawatt (GW) by March 2028. This expansion will require substantial capital expenditure, with operators committing significant resources to land acquisition, power infrastructure, cooling systems and network connectivity. As a result, debt funding is expected to rise, but credit profiles are likely to remain stable due to predictable cash flows from operational facilities and long-term customer contracts.
An analysis of data centre operators accounting for roughly 75–80% of India’s operational capacity suggests that leverage levels will remain under control. Stable utilisation rates and contracted revenues should help keep gross debt to Ebitda within manageable limits, even as balance sheets expand to fund new projects.
Three structural drivers are underpinning the sector’s growth. The first is the rapid adoption of public cloud services by enterprises as part of ongoing digital transformation initiatives. Companies are increasingly moving workloads away from on-premise infrastructure to scalable cloud environments, boosting demand for third-party data centre capacity. The second driver is the surge in investment in artificial intelligence. AI workloads require high-density computing, advanced cooling and robust power availability, all of which favour modern, large-scale data centre campuses. The third factor is the rollout of 5G technology, which is increasing demand for low-latency applications such as video streaming, online gaming and internet-of-things services. These use cases require data centres to be located closer to consumption centres, driving capacity additions across multiple geographies.
Between fiscals 2026 and 2028, an incremental 1.1–1.3 GW of data centre capacity is expected to be commissioned. Given India’s relatively low data centre density of around 65 MW per exabyte, among the lowest globally, most of this new capacity is likely to achieve timely customer tie-ups. High utilisation levels of about 90–95% are expected, broadly in line with performance over the past three fiscals, reflecting the depth of unmet demand in the market.
The strong demand environment provides considerable headroom for the supply side to scale up. Industry-wide capital expenditure over fiscals 2026–2028 is estimated at INR550bn–650bn. While this will involve sizeable borrowing, growing Ebitda from commissioned capacities should help keep leverage broadly steady at around 4.6–4.7 times, supporting overall credit quality.
Another factor strengthening credit profiles is customer stickiness. Data centre customers face high switching costs due to the complexity of migrating data and applications, as well as the need for long-term reliability. Long-duration contracts, particularly with hyperscalers, provide stable and predictable cash flow visibility. Hyperscalers now account for more than half of total capacity tie-ups, reflecting their expanding footprint in India’s digital economy.
At the same time, the increasing dominance of hyperscalers introduces new challenges. Their scale gives them significant bargaining power in commercial negotiations, and over the medium term they are expected to develop more captive data centre capacity. This could intensify competition and exert pressure on pricing for third-party operators. Average pricing for new contracts has remained largely stable over the past two fiscals, but this trend will need to be monitored as supply expands.
Looking ahead, the sector’s outlook will hinge on execution. The ability of operators to commission projects on schedule, secure adequate power and connectivity, and tie up customers at sustainable rates will be critical. As India’s digital economy continues to deepen, data centres are set to become one of the country’s most strategically important infrastructure assets, attracting sustained capital and shaping the next phase of growth.
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