India’s data centre capacity surges over four-fold: A 1,575 MW backbone for ‘AI and digital India’

Data centres, which form a critical part of India’s Digital India infrastructure, are being developed primarily by private companies, with investments coming from both domestic and international players.

Established hubs such as Mumbai, Navi Mumbai, Chennai, Hyderabad, Bengaluru, Delhi-NCR and Gujarat continue to anchor the sector, while Andhra Pradesh, Madhya Pradesh, Chhattisgarh and West Bengal are emerging as new investment destinations.

India’s data-centre expansion is being driven by major projects such as the AdaniConneX–Google AI campus in Visakhapatnam, Reliance Industries’ proposed 1 GW facility in Jamnagar, and CtrlS developments in Hyderabad and Kolkata. Sify, STT Global Data Centres and Larsen & Toubro are also adding capacity in Visakhapatnam, Navi Mumbai and Sriperumbudur. These projects are focused on hyperscale infrastructure, AI workloads, reliable power, renewable energy and advanced cooling systems.

The government said the rapid expansion is being supported by the IndiaAI Mission, which seeks to create a sovereign AI ecosystem based on domestic compute capacity, foundational models and indigenous applications. At the same time, policymakers are focusing on the energy and environmental challenges associated with large-scale data centre operations. Measures such as the Green Energy Open Access Rules, renewable energy corridors, solar and wind initiatives, the National Green Hydrogen Mission and the SHANTI Act are intended to improve the availability of reliable, cleaner power.

AI growth meets sustainable data centres

Data centre operators are also adopting direct-to-chip liquid cooling, adiabatic cooling, immersion cooling and closed-loop liquid cooling, alongside high-density racks, to manage AI workloads while reducing electricity and water consumption. Standards issued by the Bureau of Indian Standards for Power Usage Effectiveness, Carbon Usage Effectiveness, Cooling Efficiency Ratio and Water Usage Effectiveness, together with energy and water conservation building codes, are expected to guide the sector’s sustainable growth.

The core stimulus for this growth is not just private investment and market demand, but a targeted national program—the IndiaAI Mission. In a written response to Lok Sabha members, Minister of State (MoS) for Electronics and Information Technology Jitin Prasada stated that the IndiaAI Mission is “building a sovereign AI ecosystem” and that the government is instituting measures to ensure the environmentally sustainable expansion of AI infrastructure and data centres.

He described a data centre landscape that has evolved from its 2020 footprint of 375 MW to a current capacity of about 1,575 MW, driven by the accelerating needs of AI and HPC. The emphasis on a sovereign stack—compute capacity, foundational models, and indigenous applications—reflects New Delhi’s intent to democratize access to AI technologies while retaining strategic influence over critical infrastructure.

This expansion is not happening in a vacuum. The government highlights a multi-pronged approach to ensure that the growth is both rapid and responsibly managed. The IndiaAI Mission is framed to create a national AI stack, but more importantly, the policy apparatus includes substantive measures to promote renewable energy and improve resource efficiency. The government has already put in motion a suite of programs designed to green and modernize the energy and environmental footprint of data centres and allied AI infrastructure.

These measures include:

• Green Energy Open Access Rules and the Green Energy Corridor Scheme, designed to improve the availability and integration of renewable energy into India’s grid for data centre operations.
• The Green Term Ahead Market (GTAM), which provides a mechanism to procure renewable energy in a forward-looking, market-based manner.
• The National Green Hydrogen Mission and the National Programme on High Efficiency Solar PV Modules, aimed at decarbonizing industrial energy use and accelerating clean power deployment.
• Offshore Wind VGF Scheme and Solar Park Scheme, expanding the renewable energy portfolio to reduce reliance on fossil fuel-based power sources.
• The SHANTI Act (Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India), conceived to strengthen reliable clean power for emerging sectors like AI and data centres, including potential deployment of Small Modular and Micro Nuclear Reactors.
• Standards and codes: BIS has published Indian standards spanning Power Usage Effectiveness (PUE), Carbon Usage Effectiveness (CUE), Cooling Efficiency Ratio, and Water Usage Effectiveness (WUE) for data centres. The Bureau of Energy Efficiency has notified ECBC 2017 and ECSBC 2024, codifying energy efficiency and water conservation norms specific to data centres.

India’s data centres shift toward greener cooling

These policy levers form a framework intended to drive electricity efficiency, renewable energy use, cooling efficiency, and overall reductions in carbon emissions and water consumption as AI infrastructure continues to expand. The government emphasizes that, in practice, data centres are mostly developed, owned, and operated by private entities and that investment comes from both domestic and international players. It is noteworthy that the government does not provide subsidies for data centre establishment, signalling a confidence in market-driven growth within a robust regulatory environment.

Geography and deployment patterns show a mature, distributed industry. The government notes that the location choices account for demand projections, operational expenses, power availability, skilled manpower, and the long-term viability of business models. This is a pragmatic acknowledgment of the sector’s reliance on both cost efficiencies and the reliability of energy supplies, which are essential for maintaining uptime, minimising risk, and ensuring scalable AI workloads.

A key strategic driver behind the capacity surge is the AI-enabled demand curve. The government highlights that AI workloads—heavy in compute and data throughput—are compelling data centre operators to deploy higher-density racks and adopt advanced cooling technologies.

The sector is increasingly embracing direct-to-chip liquid cooling, adiabatic cooling, immersion cooling, and closed-loop liquid cooling systems. These cooling methods are essential for supporting modern, high-density servers while simultaneously reducing water and power consumption—a critical concern given India’s water stress and the carbon footprint of large-scale compute operations.

Water usage and cooling are foregrounded in the policy narrative. The data centre industry’s water requirements depend on the cooling technology deployed, and regulation comes from the Jal Shakti Ministry’s groundwater management guidelines. The emphasis on Water Use Efficiency (WUE) reflects a policy-driven effort to reconcile AI-driven growth with environmental stewardship. In practical terms, industry players are moving toward closed-loop liquid cooling and high-density configurations to minimise the water footprint per unit of compute.

Policy, private investment and clean energy shape India’s AI infrastructure

The public communications about this growth also stress that data centres are a vital component of Digital India. They are presented not only as facilities that store and process information but as infrastructure that underpins the digital services that Indian citizens rely on—from e-governance to cloud-enabled healthcare to digital payments.

The government has framed the expansion as essential for enabling AI applications and sovereign capabilities, while also assuring that the expansion will be conducted in a way that aligns with environmental norms and sustainability goals.

Within this policy and market context, the data centre landscape shows a combination of private sector dynamism and public-sector policy support. The government notes that investments come from both domestic and foreign players, and it reiterates that subsidies for data centre establishments are not provided by the state. This stance emphasizes a market-led approach within a robust regulatory framework—one designed to drive efficient, scalable AI infrastructure while protecting the public interest and environmental considerations.

The expansion of capacity—from 375 MW in 2020 to 1,575 MW today—also reflects broader trends in India’s digital economy. The data centre build-out supports the nation’s rising demand for cloud services, AI workloads, and HPC-enabled research and industry applications. The policy architecture is designed to ensure that this growth contributes to national security and economic development.

The IndiaAI Mission, with its emphasis on sovereign compute capacity, foundational models, and indigenous applications, suggests a strategic intent: to create AI capabilities that are built, governed, and governed in part by Indian institutions and industries, rather than relying solely on external, foreign platforms.

In practical terms, the policy environment is oriented toward sustainable, reliable energy supply, modern cooling techniques, and efficient use of water. The BIS standards for PUE, CUE, Cooling Efficiency Ratio, and WUE, along with ECBC 2017 and ECSBC 2024, provide a technical backbone for measuring and improving the efficiency and environmental performance of data centres.

Operators are adopting high-density racks and newer cooling modalities as a standard of practice, reflecting an industry-wide shift toward more energy- and water-efficient compute. The SHANTI Act and related power-sector reforms signal a long-term commitment to secure, clean energy that can support India’s AI ambitions without compromising environmental standards or grid reliability.

India’s AI expansion spreads regionally while prioritising sustainability

The narrative also touches on regional development. The data centre industry, while concentrated in established tech hubs, is extending its footprint to new states and investment destinations. This diversification serves multiple purposes: it can reduce latency by bringing compute closer to users, support regional economic development, and distribute energy demand more evenly across the national grid. It also aligns with a broader push to enhance India’s digital sovereignty and resilience, ensuring that critical data processing capabilities are built and operated with a clear, domestically governed framework.

In terms of public communication, government officials have repeatedly linked data centre growth to Prime Minister Narendra Modi’s vision of democratising technology. The emphasis is on making AI technologies more accessible while ensuring that the expansion of data infrastructure does not come at the expense of environmental integrity or energy security. The overarching message is that data centres are indispensable to the Digital India Infrastructure ecosystem, and their growth must be guided by standards, efficiency, and sustainable practices.

What this means for India’s AI future is nuanced. On one hand, the data centre capacity expansion provides the essential compute backbone for AI services, research, and industry applications. On the other hand, the government’s emphasis on renewable energy, energy efficiency, and water conservation indicates an intent to balance growth with long-term sustainability. The SHANTI Act, BIS standards, and ECBC/ECSBC codes point toward a future where AI and data centres expand within a framework designed to minimize environmental impacts while maximizing reliability and resilience.

For industry observers, the August 2026 disclosures are a clarion call: AI-led compute demand has become a macro-driver of infrastructure investment, and India is responding with a calibrated mix of policy interventions, market incentives, and infrastructure planning. The numbers are striking—375 MW to 1,575 MW in six short years—but the broader story is about governed growth, sustainable energy integration, and the emergence of a sovereign AI infrastructure ecosystem. The trajectory suggests continued expansion, guided by standards, market forces, and ongoing reforms in energy and data-management policy.

As India charts its course, the data centre build-out will likely be a bellwether for broader digital transformation across sectors—from public services to private enterprises. The capacity numbers provide a measurable yardstick, but the story is about how India aligns AI ambition with energy policy, water usage norms, cooling technologies, and a governance framework that seeks to maximize national advantage while safeguarding environmental and social considerations. If the IndiaAI Mission and the associated energy and cooling strategies continue to mature, India may well redefine how a major emerging economy scales advanced compute while maintaining a commitment to sustainability and digital sovereignty.