India’s data centre industry is witnessing an unprecedented acceleration in capacity expansion, with annual capacity additions rising nearly 2.4 times from around 778 MW in FY23 to about 1,900 MW in FY26, according to a report by KPMG.
The report said FY26 marked a significant milestone, with year-on-year capacity additions reaching levels that were previously expected much later in the decade. Capacity additions in FY26 alone were around 500 MW higher than FY25, reflecting strong long-term commitments from hyperscale cloud providers that are adding capacity in phases.
While the Indian data centre market was historically driven by colocation facilities catering to domestic enterprises, BFSI institutions and telecom operators, the current growth cycle is increasingly being powered by hyperscale cloud providers, global content platforms and AI-first companies.
KPMG said India’s data centre journey mirrors the country’s digital transformation over the past two decades. Following the dotcom slowdown in the early 2000s, growth remained modest, with only about 75 MW of capacity added over seven years. The rollout of 2G and early 3G services, followed by rapid smartphone adoption and the launch of 4G networks, steadily increased data consumption and demand for digital infrastructure.
The report noted that a sharp decline in mobile data tariffs, the rapid adoption of digital payments after demonetisation and the launch of affordable 4G services further accelerated data consumption, laying the foundation for today’s expansion in data centre infrastructure.
India’s installed data centre capacity has grown consistently over the years, rising from 75 MW in FY07 to 100 MW in FY15, 299 MW in FY19, 450 MW in FY21, 778 MW in FY23, 900 MW in FY24, 1,500 MW in FY25, and reaching 1,900 MW in FY26.
According to KPMG, the industry is now entering a new phase driven by artificial intelligence, cloud computing, edge computing and large-scale infrastructure investments. The report said the market has evolved from telecom-led growth to an AI-centric ecosystem, with hyperscalers increasingly making proactive investments to meet the country’s rapidly expanding digital infrastructure requirements.
