India's data centre market has crossed 1.6 GW of live IT capacity across seven key markets in 2025, up from 296 MW in 2016, according to Knight Frank India's India Data Centre Market Update 2025. The sector added 371.5 MW of capacity during 2025, following 361.6 MW added in 2024, reflecting sustained growth driven by artificial intelligence (AI), cloud adoption, enterprise digitisation and data localisation requirements.

The report notes that committed and early-stage development pipelines now exceed 8 GW, supported by investment commitments of more than USD 100 billion. AI-related colocation leasing reached 348 MW in 2025, while cumulative AI-linked leasing capacity rose to 492.2 MW, highlighting the growing impact of generative AI and high-performance computing workloads on digital infrastructure demand.

Mumbai retained its position as India's largest data centre market, accounting for 47 per cent of total live capacity at 766.6 MW. Hyderabad emerged as a leading AI infrastructure destination, while Chennai strengthened its role as a gateway for international data traffic through subsea cable connectivity.

Knight Frank also highlighted the emergence of Tier-II cities such as Visakhapatnam and Jamnagar as future hyperscale and AI infrastructure hubs, supported by large-scale investments and planned digital infrastructure projects.

The report noted that policy support, sovereign AI initiatives and increasing cloud adoption are accelerating sector growth, although challenges related to power infrastructure, permitting processes and sustainability remain key considerations for future expansion.