Data Centre Growth To Gather Pace Amid Rising AI Adoption: Report

INDIA, 24 JULY 2026 —

A recent report by JM Financial indicates that India's data centre sector is poised for significant growth, driven by increasing adoption of artificial intelligence (AI), cloud computing, and enterprise digitalisation. The report highlights that land, power, and renewable energy access will be crucial factors as developers expand capacity to meet rising demand. According to the report, the industry is still in its early stages, despite growing investments and rising capacity additions, with access to land and grid-connected power being the biggest competitive advantage.

The Indian data centre sector has been gaining momentum in recent years, with several major players investing heavily in the development of new facilities. However, the report notes that land acquisition, power availability, and execution challenges could influence the pace of expansion. Companies with existing land banks and experience in developing large-scale data centres are likely to strengthen their market position, as established access to land and electricity infrastructure can significantly reduce deployment timelines. The report identifies access to land and power as key differentiators, with developers having ready infrastructure expected to execute projects faster than their peers. As the sector expands, these factors are likely to become even more important.

The report provides detailed insights into the current state of the Indian data centre market, highlighting the growing importance of access to renewable energy. As AI applications increase electricity consumption across data centres, sustainability is becoming a critical consideration. Besides improving energy efficiency, enterprises are placing greater emphasis on securing renewable power to support their digital infrastructure. Maintaining a low Power Usage Effectiveness (PUE) remains important, but access to renewable energy is emerging as an equally significant priority. Long-term renewable power procurement is likely to play a bigger role in future expansion plans. The report also notes that data centre operators are evaluating different business models to improve returns and meet changing customer requirements, with colocation services providing stable revenue through long-term contracts, while integrated infrastructure offerings can generate higher revenue per megawatt and improve customer retention.

In the Malaysian market, the growth of India's data centre sector is likely to have a positive impact, as Malaysian companies increasingly look to expand their digital presence in the region. The report's findings on the importance of access to land, power, and renewable energy are also relevant to the Malaysian market, where data centre developers are facing similar challenges. As the demand for digital infrastructure continues to rise, Malaysian companies may look to invest in Indian data centres or partner with Indian companies to expand their reach. The report's insights on the different business models being adopted by data centre operators, including colocation services and integrated infrastructure offerings, may also be of interest to Malaysian companies looking to enter the Indian market.

The report highlights the strategies adopted by major IT companies, such as TCS and HCLTech, which are expanding their AI-ready infrastructure and building integrated AI ecosystems. TCS is expanding AI-ready infrastructure through its HyperVault initiative, while HCLTech is building an integrated AI ecosystem by combining data centres, computing infrastructure, and AI models for enterprise customers. These developments are likely to have a significant impact on the Indian data centre market, as companies look to leverage AI and other emerging technologies to drive growth. The report notes that companies with strong execution capabilities and infrastructure readiness are expected to benefit as enterprise demand for data storage and computing capacity increases.

Overall, the report suggests that India's data centre industry has strong long-term growth potential, but access to land, power, renewable energy, and efficient project execution will determine which companies emerge as market leaders. As the sector continues to evolve, it is likely that we will see increased investment in renewable energy and sustainable infrastructure, as well as the adoption of new business models and technologies. The report's findings are likely to be of interest to companies operating in the Malaysian market, as they look to expand their digital presence in the region and navigate the challenges and opportunities presented by the growing demand for data centre capacity. With the Indian data centre market expected to continue growing in the coming years, it is likely that we will see increased collaboration and investment between Indian and Malaysian companies, driving growth and innovation in the region.

Related: JM Financial · India