India data centre capacity set to hit 6 GW by 2029

India's data centre capacity is projected to reach 6 GW by 2029, implying an investment requirement of USD $110 billion across the sector, according to JLL.

Installed capacity had already surpassed 1.6 GW by the end of the first half of 2026, a fivefold increase from 2019 levels. JLL expects another 4.4 GW to be added by 2029, alongside 49 million sq ft of real estate development.

Demand in the first half of 2026 outpaced recent norms. Absorption reached 101 MW in the six-month period, more than 20% above the three-year first-half average, while new supply totalled 85 MW, concentrated mainly in Mumbai and Chennai.

That imbalance tightened the market. Vacancy fell to 2.8% as operators delivered space that had already been committed in advance, reflecting strong demand from cloud and artificial intelligence workloads.

Self-build shift

A large share of the next wave of expansion is expected to come from hyperscale operators building their own facilities rather than leasing third-party colocation space. Self-build projects could account for nearly 30% of new capacity, with 1.4 GW due by 2029, JLL said.

The build-out is set to reshape the geography of India's data centre market. While Mumbai and Chennai remain established locations, Hyderabad and Visakhapatnam are emerging as major destinations for large-scale developments tied to cloud and AI demand.

JLL's regional breakdown shows Mumbai taking 35% of the planned supply pipeline through 2029, largely in colocation projects. Hyderabad is expected to account for 24%, with a mix of self-build and colocation, while Visakhapatnam is projected at 14% and Chennai at 9%.

Policy support

The forecast comes amid policy support for foreign cloud providers. A 20-year tax holiday announced in India's Union Budget for foreign cloud services providers has helped unlock more than USD $50 billion in foreign capital commitments, according to JLL.

The incentive runs until 2047 and is intended to support long-term investment in cloud and AI infrastructure. It has reduced some of the risk around long-horizon projects that require large capital commitments and dependable electricity supply, JLL said.

Power remains central to the industry's prospects. India's planned expansion in nuclear generation, including a target of 22.38 GW by 2031-32 and 100 GW by 2047, is expected to strengthen baseload supply for energy-intensive digital infrastructure, while smaller reactor technologies could later support off-grid campuses.

Capital stack

The projected USD $110 billion spend is spread across several layers of infrastructure. Around USD $4 billion would go towards real estate construction, USD $18 billion towards mechanical, electrical and plumbing systems, and USD $88 billion towards IT equipment such as servers and racks, JLL said.

The scale of that investment is likely to affect more than property developers and data centre operators. The sector's expansion is expected to create demand across electricity generation, transmission, telecoms, manufacturing and technical labour markets.

Regulation is another driver. The implementation of India's Digital Personal Data Protection rules, with full compliance due by May 2027, is expected to increase demand for domestic processing and storage, especially in banking, healthcare and technology.

Requirements for localised data handling, stronger security controls and immediate breach reporting could favour operators able to offer compliant infrastructure within India. That, in turn, may reinforce investment in so-called sovereign data centre capacity.

Sustainability is also shaping design choices for new sites. Operators are increasingly looking at liquid cooling, greater use of renewable energy and designs intended to reduce energy and water use as denser AI workloads place more pressure on facilities.

Rachit Mohan, Managing Director, Data Centre Leasing, APAC, JLL, said the changes marked a major shift in the market's trajectory. "India's data centre landscape is undergoing a fundamental transformation unprecedented in scale and ambition. The convergence of landmark tax incentives with massive hyperscale investments for AI-driven infrastructure requirements positions India as a strategic global hub for digital innovation."

He added that the projected capital flows would reshape the wider technology economy. "With 4.4 GW of new capacity requiring $110 billion in capital by 2030, we are witnessing the creation of an entirely new digital infrastructure ecosystem that will reshape India's technology landscape and drive economic growth for decades to come," Mohan said.