India's Data Centre Boom: Capacity to Soar 10x by 2035 Amid AI Surge

The growth in data centre industry mirrors the growth trajectory of the digital economy which already contributes $402 billion or 11.74 per cent of the GDP (FY 2022-23) and is expected to account for around 20 per cent of national income, surpassing agriculture and manufacturing by FY 2029-30, said the PwC India report.

India's data centres form the core of the country's digital economy, underpinning everything from e-governance and fintech to media streaming, e-commerce and advanced AI workloads.

According to Vinish Bawa, Partner and Leader, Telecom and Data Centres, PwC India, "We are seeing a clear inflection point in India's data centre market. There is firmly in place an ecosystem of growing demand as a consequence of widespread adoption of cloud, data localisation, and emergence of AI".

What is needed to underpin the next phase is a stable and future-proof legislative and tax framework that accommodates the significant capital intensity and tech that modern data centres require. The opportunity is there for India to convert digital scale to sustainable global competitive advantage, Bawa mentioned.

The dara centre expansion is backed by several investment commitments from domestic and global operators, real estate developers and infrastructure investors over the next decade.

Also, a majority of all the existing capacity is concentrated in Mumbai, Chennai, Delhi-NCR, Bengaluru, Hyderabad, Pune and Kolkata, mainly due to proximity to customers, reliable power supply, undersea cable connectivity and hyperscaler investments.

But, at the same time, tier 2 cities are also fast catching up as hubs for edge data centres, the report found.

"The economic value that can be unlocked from the data economy can only be fully realised when data centres themselves are part of the data economy. Central and State Governments have proactively developed and enabled frameworks for driving new investments after providing predictability and certainty and through comprehensive, end-to-end tax guidance," said Kunj Vaidya Partner, Tax PwC India, said.

- IANS