India's data centre ecosystem presents a massive opportunity driven by artificial intelligence and digital transformation. According to consulting firm PwC, the country's installed capacity currently stands at approximately 1.6 GW and is expected to grow 8.5x to reach about 13.8 GW by 2035. This substantial expansion is projected to generate a potential order book of $280 billion by 2035, as reported by PwC India. The sector is experiencing unprecedented momentum, with India having roughly 1 GW of DC capacity by end FY26 and set to double this financial year, reaching 8 GW by 2030. Multinationals like Google, Meta and Microsoft have big India-specific DC plans, along with domestic players Adani group, Reliance, Bharti and Tata, representing over $30 billion in capital expenditure.
The $280 billion potential order book spans multiple segments across the value chain. Direct investments to build core data centre facilities are estimated at $71.6 billion by 2035, while the broader ecosystem offers a significantly larger opportunity. IT equipment, including chips, servers, and networking systems, will constitute the lion's share at 65-75% of capital expenditure, translating to $180-210 billion, according to PwC India. Electrical infrastructure and cooling systems are expected to generate order books of $18-26 billion and $15-20 billion, respectively. The DC buildout is driving demand across multiple sectors, including turbines (Triveni Turbine), specialty cables (APAR Industries), transformers (Siemens Energy, CG Power), chillers and cooling towers (Thermax), and skids (Praj Industries). Cummins reports that DCs already contribute 30-35% of domestic revenues for diesel genset manufacturers.
The rising adoption of AI is fundamentally altering infrastructure requirements. As reported by PwC, traditional air-cooled systems and thermal containments, which support workloads up to 12-18 kilowatts (kW), are proving insufficient. Hyperscale and enterprise AI workloads now demand direct liquid-to-chip cooling (up to 150 kW) and immersion-based cooling systems (over 150 kW), which are projected to capture the maximum share of future cooling infrastructure. This technological evolution is driving significant demand for specialized equipment and components across the data centre value chain.
Despite the growth prospects, the sector faces significant sustainability challenges that could derail its expansion. According to Business Standard, data centres are sinkholes when it comes to power and water consumption, with projections that by 2030, they would generate 8-10% of global power demand. They require huge quantities of water for cooling and can be very noisy and polluting due to the nature of power demand requiring 100% uptime, leading to use of diesel gensets. India is water-stressed and struggles to meet peak power demands, while being the world's most polluted place. Recent experience in the United States shows that 48 US DC projects, worth $156 billion, were blocked or stalled in 2025, with 71% of Americans now opposing DC construction in local communities. This growing resistance is driven by concerns over water and energy consumption, inflated utility bills, and noise pollution.
To mitigate sustainability risks and capitalise on the opportunity, PwC has suggested introducing a Production-Linked Incentive (PLI) scheme specifically for data centre equipment manufacturing. The firm also recommended establishing manufacturing clusters under the 'Make in India' programme, facilitating fast-track joint ventures between Indian companies and global OEMs and aggregating demand from the government and hyperscalers to provide predictable order books for manufacturers setting up facilities in the country. Business Standard emphasizes that sustainability must be built into the policy structure and stringently enforced in design, including using and recycling wastewater, inducting renewables with battery storage to reduce diesel genset dependency, and addressing water and energy consumption concerns through good design policies.
