Here’s how AI is driving India's data centre investment pipeline

India's data centre industry is entering its biggest investment cycle yet, with the sector's development pipeline swelling to nearly $90 billion as artificial intelligence (AI), cloud computing, and digital services accelerate demand for computing infrastructure.   According to a report by Rubix Data Sciences, the pipeline of projects under development and announced is nearly six times larger than the $13-15 billion invested between 2020 and 2024, signalling a sharp shift from steady expansion to hyperscale infrastructure buildout.   The report projects India's installed data centre capacity to surge from 1.5 GW in 2025 to 6.5 GW by 2030, while capacity additions have already gathered pace. India added 387 MW of IT capacity in 2025, more than double the 191 MW added a year earlier, representing a 103% year-on-year increase.   Much of this investment is being led by global hyperscalers. Amazon Web Services, Microsoft, and Google have together announced investments worth around $67.5 billion in India, reinforcing the country's position as a strategic AI and cloud infrastructure hub. The Ministry of Electronics and Information Technology has separately estimated that announced investments in the sector stand at around $90 billion, while the government expects AI-led digital infrastructure to catalyse up to $200 billion of investments over the coming years.   Despite generating nearly 20% of the world's data, India currently accounts for only 3-4% of global installed data centre capacity, highlighting significant room for expansion. As of January 2026, the country had 271 operational data centres, with Mumbai, Hyderabad, Delhi NCR, Bengaluru, and Chennai accounting for nearly 65% of all facilities.   The report attributes the next wave of demand to rapid cloud adoption, AI workloads, 5G rollout, digital payments through UPI, e-commerce and OTT platforms, alongside India's cost advantage, with data centre construction estimated to be 30-40% cheaper than in China and the US.   However, the rapid expansion also raises sustainability concerns. India's data centres currently consume an estimated 150 billion litres of water annually, a figure expected to rise to nearly 359 billion litres by 2030, with more than half the facilities located in water-stressed regions. Electricity demand from the sector is projected to rise from about 1 GW currently to 13.56 GW by 2031-32, increasing pressure on the country's power infrastructure even as operators transition towards renewable energy.   "India's data centre industry has moved past its early growth phase and is now in the middle of a large-scale, AI-driven investment cycle," said Tushar Bhaskar, President, Rubix Data Sciences. He added that the sector's long-term competitiveness will depend not only on attracting investment but also on addressing constraints around power availability, water use and sustainability while building AI-ready digital infrastructure.