Rising AI adoption could drive deployment of 650,000 - 700,000 GPUs in India’s data centres over the next five years, creating a $23 billion investment opportunity, said Avendus Capital, an investment bank, in its third annual edition of its Data Centres report released on Wednesday.
India’s data centre capacity is set to grow at a 26% CAGR over the next five years, it said.
The report highlighted that AI-led infrastructure demand alongwith rising cloud and digital adoption is expected to nearly triple India’s built data centre capacity from 1.6 GW in 2025 to 5 GW by 2030.
Developers currently have an active pipeline of over 3 GW, including 1 GW of AI data centre capacity, requiring a total capital investment of nearly $25 billion over the next five years.
Mumbai is expected to remain India’s largest data centre hub, contributing to nearly half of the country’s installed and upcoming capacity over the next five years, the report said.
A key insight is the emergence of GPU infrastructure as a high-return generating segment within the Indian data centre ecosystem. At current capex and pricing levels, large-scale GPU deployments can deliver equity IRRs of over 28% (hold-to-maturity), it said.
Vaibhav Garg, director, infrastructure and real assets investment banking, Avendus Capital, chief author of the report, in a statement said, “AI adoption is emerging as a significant catalyst for next-generation infrastructure investments in data centers, alongwith sustained demand from cloud and digital workloads."
This dual demand trajectory has already translated into $5 billion of transaction activity over the last three years, with backing from global institutional investors, infrastructure funds, and strategic operators, he said.
Going forward, we also expect public markets and other strategic transactions to play a key role in funding India’s data centre growth, with three to four IPOs expected in the next three years, he added.
The report also pointed to rising private market activity in the sector, with global data centre transactions currently being done at EBITDA multiples of 20x-30x.
REITs and InvITs are increasingly being explored as capital recycling structures, given the sector’s long-term contracts and stable cash flow profile, it said.
REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) are investment vehicles that pool money from multiple investors to invest in income-generating real estate and infrastructure assets.
India’s AI market is projected to grow from $13 billion in 2025 to $131 billion by 2032 at a 39% CAGR, supported by rising enterprise adoption and investments in domestic AI capabilities, including the development of indigenous large language models (LLMs).
The report also notes that over 38,000 GPUs have already been committed under the IndiaAI Mission.
This has created substantial demand for high-density, liquid-cooled, AI-ready data centre capacity across India, it said.
