India's AI data center market may hit $280B by 2035
What's the story
India's data center industry is set for unprecedented growth, with the artificial intelligence (AI) boom projected to create a $280-billion ecosystem opportunity by 2035. This estimate comes from PwC India, which predicts that the country's installed data center capacity will grow by 8.5 times, from around 1.6 GW to nearly 13.8 GW by 2035.
Investment needs
Infrastructure investment of $71.6 billion needed for expansion
The massive expansion of India's data center industry will require a direct infrastructure investment of about $71.6 billion. Vinish Bawa, Partner and Telecom Sector Leader at PwC India, said that "India accounts for nearly 20% of global data generation but less than 2% of global data center capacity." He added this gap represents a major opportunity in the country's digital transformation journey.
Growth drivers
AI and cloud driving data center growth
The growth of India's data center industry is being driven by the adoption of AI, cloud migration, hybrid cloud deployments, data localization requirements, and the digitization of government and enterprise services. PwC India estimates that the public cloud market in India will grow at a CAGR of 23% to reach $17.8 billion by 2035. Meanwhile, the AI infrastructure market is expected to grow at an annual rate of 25-35%, reaching between $17 billion and $22 billion in this period.
Demand surge
Digital consumption trends fueling demand for data centers
Digital consumption trends are also driving demand for data centers in India. The country has over 1 billion internet users, around 700 million smartphone users, and nearly 500 million 5G smartphones. PwC India estimates that IT equipment will account for 65-75% of capital expenditure, translating into a potential order book of $180-$210 billion by 2035.
Design evolution
AI workloads changing data center design
The rise of AI workloads is changing the design of data centers. Traditional air-cooled systems supporting workloads up to 12-18 kW per rack are becoming inadequate for AI applications. New hyperscale AI facilities require direct liquid-to-chip cooling capable of supporting up to 150 kW per rack, making immersion cooling the fastest-growing segment of future infrastructure.
Capacity distribution
Emerging data center hubs in India
Mumbai leads with over half of the installed capacity in India. Mumbai and Chennai together account for nearly 80-85% of the country's data center capacity due to their subsea cable landing infrastructure. Emerging hubs like Visakhapatnam, Kolkata, and Gujarat are expected to attract future investments in this sector.