Data centre growth in India to double by 2028 as AI demand surges
India’s data centre industry will add 1.1 million racks over the next five years, taking total capacity to 2.2 million racks by 2028, JM Financial estimated.
Source: businessworld.in · July 23, 2026 at 6:54 PM · AI-assisted report
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INDIA, 24 JULY 2026 —
India’s data centre industry will add 1.1 million racks over the next five years, taking total capacity to 2.2 million racks by 2028, JM Financial estimated.
The brokerage said rising artificial-intelligence workloads, cloud adoption and enterprise digitalisation would push annual capacity additions above 200,000 racks from fiscal 2026, up from 120,000-130,000 today. Land availability, grid-connected power and execution speed remain the decisive bottlenecks.
Companies with pre-approved land parcels and in-house power assets can deliver new facilities 12-18 months faster than peers, the report said. JM Financial warned that without such infrastructure, developers risk forfeiting revenue as hyperscale and AI customers sign long-term contracts only with operators that can meet tight timelines.
Business models are shifting to improve returns. Colocation providers still secure the steadiest cash flows through multi-year leases, but integrated offerings—combining space, cooling, networks and managed services—yield as much as 30% higher revenue per megawatt. The trade-off is 15-20% higher capital expenditure and added technology risk, JM Financial noted.
Operators are also weighing capital-light operating-expenditure leases against outright asset ownership. Early signs point to a preference for opex deals in Tier-2 cities where utilisation is lower, while capex models dominate Mumbai and Chennai where demand is concentrated.
Sustainability is now a commercial imperative. AI workloads can raise power consumption by up to 40% in legacy facilities, pushing operators to target Power Usage Effectiveness ratios below 1.2. JM Financial said renewable energy procurement is becoming the second metric investors scrutinise, with long-term green-power contracts increasingly written into expansion blueprints.
Major IT services firms are adapting strategies accordingly. Tata Consultancy Services plans to add 300 MW of AI-ready capacity through its HyperVault initiative by 2027, while HCLTech is integrating data centres, high-performance computing and proprietary AI models into a single enterprise stack. Both approaches aim to capture the premium pricing available for AI-optimised infrastructure.
Related: JM Financial · India
Malaysia Impact
The growth of India's data centre sector is likely to have a positive impact on the Malaysian market, as Malaysian companies look to expand their digital presence in the region. Malaysian companies may invest in Indian data centres or partner with Indian companies to expand their reach.