India’s rapid data centre buildout is opening up a parallel market for cooling and thermal management, with the segment projected to see $2-2.5 billion in investments over the next few years as higher computing loads increase heat intensity.
The country’s operational data centre capacity has expanded fourfold since 2020 to about 1.5 GW and continues to scale up, pushing operators to adopt more advanced cooling systems. Traditional air cooling is increasingly being supplemented by liquid-based technologies as facilities deal with higher rack densities and energy consumption.
What do analysts say?
“We expect India’s data centre capacity to reach 3-3.5 GW in 4-5 years from about 1.5 GW now. At roughly $1.3 billion per GW for cooling, this implies $2-2.5 billion capex for incremental capacity,” Yijing Ng, analyst at S&P Global Ratings, said. She added that rising cooling needs could strain water resources in already water-stressed regions and may influence supply expansion.
Large operators and service providers are already moving towards liquid cooling. NTT has deployed liquid immersion and direct contact liquid cooling systems in India, while Yotta Group has adopted similar technologies. Equinix is also building its Chennai facility with support for advanced liquid cooling.
Global firms dominate
Global firms such as Vertiv and Schneider Electric Infrastructure continue to dominate the segment, though domestic startups are beginning to enter niche areas. Hyderabad-based Refroid Technologies has developed a single-phase liquid immersion cooling solution locally.
“At least 75% of data centre ramp-up is AI-driven. Companies like Google, Meta, Amazon and Microsoft are building or partnering for capacity, and India is a preferred destination,” Satya Bhavaraju, CEO of Refroid Technologies, said. He added that supply constraints at established vendors are pushing clients to explore alternatives and that the company is in discussions with hyperscalers.
Startups are also exploring resource-efficient models. Bengaluru-based Uravu Labs is working on systems that convert heat generated in data centres into water using liquid desiccants. “As temperatures rise to 40-55 degrees, it made sense to move into this sector. We call it water-positive cooling,” Swapnil Shrivastav, CEO of Uravu Labs, said. He added that the firm currently produces about 4,000 litres of water per day and plans to scale up to 30,000 litres.
Industry executives say the shift towards hyperscale facilities and higher computing densities is changing cooling requirements. “Demand is moving towards precision cooling, airflow management and liquid-based systems. This is also drawing investor interest as data centres emerge as a key demand driver,” said Vasudha Madhavan, founder and CEO of Ostara Advisors.