India’s total data centre sector revenue is projected to reach approximately $45.69 billion by 2033, driven by rising AI workloads, cloud adoption and data localisation requirements, according to a report by KPMG.
The report, titled India’s Data Centre Revolution: The Integrated Lifecycle Blueprint (2026–2030), said the country’s AI-optimised data centre market is expected to grow from about $588.6 million in 2024 to $3.55 billion by 2030, registering a compound annual growth rate (CAGR) of 35.1%.
Also Read: Beating the Heat: India’s data centre dream and the 50°C reality in its path
KPMG said India’s data centre industry is entering a new phase where AI infrastructure, rather than traditional cloud demand alone, will shape future growth. The report noted that many older facilities in the country still rely on legacy air-cooling systems that are unable to efficiently support high-density graphics processing unit (GPU) clusters used for AI applications.
“With one billion internet users and businesses rapidly adopting cloud services, building domestic data centres is now a necessity,” the report said.
The consultancy argued that the sector’s biggest challenge is no longer demand, but the complexity of execution. According to the report, the industry currently depends on fragmented providers across construction, cooling, technology and operations, often resulting in delays and unclear accountability.
To address this, KPMG proposed an “integrated lifecycle partner” model where a single provider oversees the entire chain — from land acquisition and power procurement to AI deployment, compliance and maintenance.
The report also highlighted the role of India’s Digital Personal Data Protection (DPDP) Act in accelerating local infrastructure demand. It said restrictions around cross-border data transfers are pushing global enterprises to establish physical data residency infrastructure in India.
It added that environmental, social and governance (ESG) priorities are increasingly influencing investor sentiment, with operators focusing on renewable energy integration, energy-efficient operations and sustainable infrastructure models to attract global capital.
India currently permits 100% foreign direct investment under the automatic route for data centres, which the report said continues to support capital inflows into the sector.
“India’s data centre industry is moving into a new phase of accelerated growth driven by AI-led workloads, cloud adoption, and evolving data localization requirements,” said KG Purushothaman, Head – Digital Solutions and National Leader – Artificial Intelligence at KPMG in India.
“As infrastructure demand increases, the market will require integrated execution models that can combine engineering capabilities, AI readiness, regulatory understanding, and operational accountability to support large-scale and future-ready digital infrastructure development,” he added.
Unaise Urfi, Partner – Digital Solution, Strategy and Insights at KPMG in India, said execution capability would become as important as infrastructure capacity creation as deployment complexity rises across AI readiness, regulatory compliance, operational efficiency, capital structuring and ESG priorities.
