Wednesday 26 / March / 2025
New Delhi : India's Generative Artificial Intelligence (Gen AI) sector is expected to witness strong growth over the next five years, creating a surge in demand for data centres (DC), says a report by ANAROCK.
The report highlighted that as per industry estimates, the market size of Gen AI in India is projected to grow from USD 1.1 billion in 2025 to USD 6.4 billion in 2030, expanding at a compound annual growth rate (CAGR) of 42 per cent.
It said "Data centres are going to play an important role throughout this digital transformation with increase in demand for compute power, storage and data management capabilities".
As AI-driven applications become more advanced, data centre operators are re-evaluating their strategies to accommodate the increased infrastructure needs. The growing demand for computing power, storage, and efficient data management is pushing the expansion of data centres across the country.
Additionally, as Gen AI moves towards real-time applications, low-latency processing will become crucial. This will lead to a rise in edge data centres to bring computing closer to users and reduce processing delays.
The demand for edge data centres will see significant growth, especially in Tier-II cities such as Jaipur, Ahmedabad, Visakhapatnam, Kochi, Bhubaneswar, Lucknow, and Patna. These facilities will help process data closer to users, improving speed and efficiency for AI-driven applications.
With the rapid expansion of the data centre industry, there is also a strong focus on sustainability and energy efficiency. DC operators are prioritizing the use of renewable energy sources and adopting energy-efficient solutions to meet the growing power demands of these facilities. This shift towards green data centres aligns with India's broader sustainability goals and energy policies.
India's data centre industry has witnessed remarkable growth in the last five years, evolving from a small sector into a major investment hub. Over the past decade, private equity (PE) investors, joint venture (JV) platforms, and acquisitions have led to commitments worth over USD 6.5 billion. The sector has also benefited from infrastructure status, making project financing easier for data centre developers.
With continued interest from global and private investors, India's data centre industry is set to grow multi-fold in the coming years, playing a crucial role in the country's digital transformation.
