According to a report by Avendus Capital, India's artificial intelligence infrastructure is set for explosive growth over the next five years. The report estimates that 650,000-700,000 graphics processing units (GPUs) will be deployed in India's data centres, creating a $23 billion investment opportunity. This massive deployment is driven by the fundamental shift in data centre requirements, as AI applications demand GPU-intensive infrastructure, liquid cooling systems, higher rack density and significantly greater power consumption compared to traditional cloud storage and enterprise workloads. The report notes that large-scale GPU deployments can generate equity internal rates of return exceeding 28 per cent on a hold-to-maturity basis, making GPU infrastructure an emerging high-return segment within India's data centre market.
The domestic AI market has demonstrated strong momentum, growing from $10 billion in 2024 to $13 billion in 2025, positioning itself to reach $131 billion by 2032 at a 39 per cent compound annual growth rate (CAGR). Within the 2025 market segment, the BFSI sector leads with $2.5 billion, followed by startups at $1.8 billion, media at $1.6 billion, manufacturing at $1.4 billion, and tech services at $1.3 billion. The public sector accounts for $1.2 billion, while other segments make up $3.3 billion. Enterprise adoption is robust, with 45 per cent of Indian enterprises already implementing AI in their business processes, including 25 per cent with small-scale implementations and 20 per cent operating with AI-led processes aligned with business metrics. However, 49 per cent of companies remain in the proof-of-concept phase, while 6 per cent state that AI is not a priority. Enterprise infrastructure choices support this shift, as 64 per cent of enterprises indicate the propensity to build in-house AI products on cloud-provisioned compute and storage resources.
The report projects India's built data centre capacity will nearly triple from 1.6 gigawatts (GW) in 2025 to nearly 5 GW by 2030. Developers currently maintain an active pipeline of more than 3 GW, including nearly 1 GW of AI-focused data centre capacity, requiring total capital investment of about $25 billion over the next five years. As reported by Avendus Capital, India's total data centre capacity is expected to grow at a compound annual growth rate (CAGR) of 26 per cent over the next five years, driven by rising artificial intelligence adoption, cloud demand and digital infrastructure expansion. Mumbai is expected to remain the country's largest data centre hub, accounting for nearly half of India's installed and upcoming capacity during this period.
The report identifies GPU infrastructure as a high-return segment within India's data centre ecosystem. At current capital expenditure and pricing levels, large-scale GPU deployments could generate an equity internal rate of return (IRR) of 25.5 per cent, with payback periods of under three years. This strong financial performance is attributed to the significant demand for AI-ready data centre infrastructure across the country, with more than 38,000 GPUs already committed under the IndiaAI Mission. The IndiaAI Compute Pillar aims at providing high-end GPUs at affordable prices, having received a total commitment of over 38,000 GPUs from bidders, with approximately 58 per cent of the allocation, or around 22,000 GPUs, already allocated for AI workloads. Additionally, the AlKosh dataset platform features 3,000 datasets and 243 AI models across 20 distinct sectors, while the IndiaAI Foundational Models initiative received over 500 proposals from model developers, with selected developers including Sarvam, Gnani.ai, Soket, and Gan.AI.
India maintains significant global AI infrastructure advantages, hosting more than 1,800 Global Capability Centres (GCCs), including over 500 centres focused entirely on AI. The country acts as a base for approximately 1.8 lakh startups, where roughly 89 per cent of newly launched startups utilize AI within their services. India also maintains the second highest number of ChatGPT users globally with a 9 per cent share, trailing only the United States which holds 18 per cent. Brazil, Germany, and the United Kingdom follow with 5 per cent, 4 per cent, and 3 per cent respectively, while other nations account for the remaining 61 per cent. As per Vaibhav Garg, Director of Infrastructure and Real Assets Investment Banking at Avendus Capital and chief author of the report, "AI adoption is emerging as a significant catalyst for next-generation infrastructure investments in data centres, alongside sustained demand from cloud and digital workloads."
