Thursday, 1 October 2026
India is attracting data centre investment on a scale that is beginning to test the physical limits of its major digital infrastructure markets. Billions of dollars are being directed towards new campuses as cloud services and artificial intelligence increase demand for computing capacity. The next stage of the market’s development, however, will depend increasingly on whether developers can secure suitable sites with sufficient electricity, fibre connectivity and supporting infrastructure.
The scale of the challenge is illustrated by AirTrunk’s expansion plans. The Blackstone- and CPP Investments-backed operator intends to invest more than INR 3 trillion, approximately USD 30 billion, in India by 2030 and is targeting more than 5 GW of capacity. AirTrunk entered the country in April 2026 through the acquisition of Lumina CloudInfra, providing an initial development pipeline of about 600 MW across Mumbai, Chennai and Hyderabad.
These ambitions are substantial compared with the market that exists today. Industry estimates place India’s operational data centre capacity at approximately 1.75–1.8 GW by mid-2026. At the same time, several gigawatts of additional projects are already under development or being planned by other operators. This means the competition is no longer simply for customers and investment capital, but also for locations capable of supporting facilities requiring exceptionally large and reliable electricity connections.
Power availability is becoming particularly important as computing requirements increase. Large AI and cloud facilities can consume hundreds of megawatts, placing pressure not only on electricity generation but also on substations and transmission networks serving individual development locations. Access to renewable energy is another consideration as operators and their customers seek to control the environmental impact of rapidly rising electricity consumption. A site with available land but insufficient grid capacity can therefore be of limited value to a hyperscale developer.
Mumbai remains at the centre of India’s data centre industry, but its success is also creating development constraints. Knight Frank ranked the city 15th globally for operational IT capacity in its 2026 assessment. High land values and difficulty assembling very large sites are encouraging developers to examine locations across the wider metropolitan region, including Navi Mumbai, Panvel and Thane. The ability of these areas to provide land together with new power infrastructure could become increasingly important to Mumbai’s continued expansion.
Chennai has developed a strong position because of its technology sector and international communications infrastructure. Its connections to subsea cable networks make it an important point for data moving between India and other international markets. Professional market estimates put its operational capacity at more than 200 MW in mid-2026, with substantial additional development planned. Future growth will nevertheless require continued investment in electricity networks, development sites and the infrastructure surrounding new campuses.
Hyderabad is also emerging as a major alternative for large projects. Its established technology industry, availability of larger sites and expanding digital economy have attracted growing interest from operators. The city remains considerably smaller than Mumbai in terms of operating capacity, but its development pipeline indicates that this could change significantly. Delivering those projects will depend on whether electricity infrastructure and other utilities can expand at the same pace as developers’ plans.
The result is changing the definition of prime data centre real estate in India. The most valuable locations will not necessarily be those offering the cheapest or largest plots. Developers increasingly need land where substantial electricity capacity can be delivered within an acceptable timeframe, multiple fibre connections are available, cooling requirements can be managed and planning approvals allow projects to proceed without lengthy delays.
India therefore faces a different challenge from simply attracting digital infrastructure capital. Investment commitments demonstrate strong confidence in the country’s long-term demand for computing capacity, but announced gigawatts do not automatically become operating data centres. As projects become larger and AI increases their power requirements, India’s ability to expand grids, substations, renewable generation, fibre networks and development-ready land will determine how much of the enormous pipeline currently being announced can ultimately be built.
Source: © CIJ.World India Research & Analysis Team
