India is experiencing a genuine digital revolution that is transforming its economy and solidifying data center infrastructure as a fundamental pillar for growth across all sectors. As large companies, SMEs, and startups invest in digitalization, the demand for advanced data center solutions and cloud services continues to rise, accelerating the transition toward a robust and scalable digital economy.
From Physical Servers to the Cloud: A Paradigm Shift
For decades, Indian companies relied on traditional physical servers housed in data centers to store critical information and applications. However, these models are becoming obsolete in a world dominated by agility, scalability, and innovation. Physical servers have limitations in both flexibility and maintenance costs, prompting organizations to migrate toward more efficient and economical cloud platforms.
The rise of artificial intelligence and automation, which require substantial cloud computing capabilities, has significantly reduced investments in physical infrastructures, tipping the balance in favor of cloud-first models.
Mass Adoption of Cloud and Business Digitalization
Currently, the adoption of cloud services is reshaping the Indian tech landscape. Companies of all sizes are turning to the cloud for its advantages: pay-as-you-go pricing, instant scalability, reduced operational costs, increased security, and agility in application deployment. According to data from the IMARC Group, the Indian cloud market reached $29.5 billion in 2024 and could exceed $232 billion by 2033, with a compound annual growth rate of 25.8%.
Public initiatives such as Digital India, Startup India, and Make-in-India have been crucial in driving digitalization, especially in the public sector and startups, facilitating access to cutting-edge technologies and enhancing the digital economy.
Drivers of Data Center Growth in India
The rapid increase in digital demand in India is driven by several key factors:
- Digital Culture: Digital transformation is advancing at a breakneck pace in sectors such as finance, manufacturing, and retail, requiring increasingly sophisticated storage and processing infrastructures.
- Growth in Internet Users: It is estimated that by 2025, internet penetration will exceed 55% of the Indian population, translating to over 900 million connected users and an exponential increase in data storage and processing demand.
- Government Policies and Incentives: Programs like the Data Center Incentivization Scheme and the establishment of Economic Zones for Data Centers are promoting the development of new facilities. Additionally, regulations on data localization, such as the Digital Personal Data Protection Act, mandate that certain data be stored within the country.
- Deployment of 5G, Edge Computing, and AI: The rollout of 5G networks and advancements in edge computing, which require processing data close to the end user to minimize latency, are multiplying the need for distributed data centers. The mass adoption of artificial intelligence adds pressure on the capacity and processing power of data centers.
- Geographic Expansion: Although Mumbai, Chennai, and Hyderabad concentrate the most capacity, second- and third-tier cities like Ahmedabad, Jaipur, Kochi, Vizag, and Lucknow are beginning to attract investments, diversifying the country’s digital landscape.
Projections and Challenges for India’s Digital Infrastructure
Currently, the total capacity of data centers in major Indian cities is 977 MW, but according to Cushman & Wakefield, this is expected to reach 2.29 GW by 2028. The market value is estimated to rise from $4.5 billion in 2023 to $11.6 billion in 2032.
Among the leading players in this boom are CTRLS Datacenters Ltd., NTT Global Data Centers, Arshiya Ltd., Sift Technologies, Cisco Systems, Microsoft Corporation, and Reliance Datacenter.
However, despite generating nearly 20% of global data, India only accounts for 3% of global data center capacity, indicating significant room for growth and opportunities for investors and operators.
The Future: Decentralization and Sustainability
The development of data centers is no longer confined to major urban areas. Medium and small cities are emerging as investment hubs, promoting decentralization and technological development in less urbanized areas. Additionally, the challenge of energy efficiency and sustainability is at the forefront of the debate, encouraging the adoption of green technologies and renewable energy to minimize environmental impact.
The expansion of digital infrastructure in India is a strategic pillar for its positioning as a technological powerhouse and for sustaining economic growth in the coming decade. The rise of data centers is undoubtedly the backbone of this digital transformation that is already shaping the country’s future.
Source: Express Computer