India’s digital world is about to get a major upgrade. The country’s third-party data centre capacity will likely double to 2,400-2,500 megawatts by fiscal year 2028, jumping from 1,250 megawatts in fiscal year 2025, according to a new report from credit ratings agency ICRA.
This big leap comes from a strong wave of investments totaling around Rs 90,000 crore over the next three years, from fiscal 2026 to 2028. But that’s just the start. Industry leaders have lined up even bigger plans: they aim to build 3.0-3.5 gigawatts of capacity over the next 7-10 years, backed by a whopping Rs 2.3-2.5 lakh crore in funding. All this highlights how vital data centres are to India’s digital transformation.
Mumbai leads the pack in India’s data centre scene, handling more than half of the current operational capacity. The city even ranks 21st worldwide among top spots for data centre power. What makes Mumbai so appealing? Its prime location, steady power supply, and closeness to undersea cable landing stations draw operators from everywhere.
Right now, India makes up about 3% of the world’s total data centre capacity, which stands at 42 gigawatts globally. The United States dominates with roughly 50%. Experts predict India’s slice will grow fast, fueled by skyrocketing data use and supportive government policies.
A fresh draft from the Ministry of Electronics and Information Technology (MeitY) could supercharge this boom. It proposes a 20-year tax exemption that would let data centre developers claim input tax credits on key costs like building materials and electrical setups. “If implemented, this policy could transform India’s data centre growth by cutting initial expenses and making projects more feasible,” said Anupama Reddy, Vice President and Co-Group Head of Corporate Ratings at ICRA. She added that it would pull in more local and international cash, giving builders the boost they need to expand.
On top of that, smaller “edge data centres” are popping up closer to users for faster connections and lower delays—crucial for industries like banking, healthcare, agriculture, and defense. These setups cut the time between a user’s action and the system’s response, making everything smoother.
Indian data centre operators are also going green. Renewable energy already covers 15-20% of their power needs, and that figure should climb to 30-35% by fiscal 2028. This shift responds to environmental, social, and governance (ESG) rules while spreading out energy sources for reliability.
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