A year of…surging capacity, cleaner power procurement and a maturing regulatory framework
India’s data centre industry is experiencing rapid growth. Live capacity is expected to reach 3GW+ by 2028, driven by digital transformation, favourable government policies and strong AI adoption.
For investors and operators, the market presents significant opportunities, including access to a large and growing customer base, tax and infrastructure incentives offered by various states and increasing localisation requirements across regulated sectors.
Challenges remain - particularly around land acquisition, regulatory complexity across jurisdictions, evolving data protection laws and compliance with sector-specific obligations. Navigating these hurdles effectively is essential to capitalise on India’s strong long-term growth potential in the data centre sector.
Data centre statistics provided by DC Byte.
Spotlight on key drivers
India’s regulatory landscape is increasingly supportive of renewable energy use within the data centre sector.
Several Indian states offer exemptions or concessions on electricity duties and transmission charges to incentivise adoption. As a result, data centre operators are investing in captive solar and wind projects to ensure a more stable and cost-effective power supply.
These initiatives also help operators navigate grid constraints and reduce dependence on state utilities. The ability to self-generate power is becoming a key strategic consideration in site selection and long-term infrastructure planning.
More Indian states are introducing supportive measures. With global demand for sustainable and green energy on the rise, improved access to affordable renewables will enhance India’s attractiveness as a data centre hub.
Several state-level policies actively incentivise this shift. For example, Odisha’s 2022 data centre policy offers reimbursement of transmission and wheeling charges for power drawn from captive renewable sources.
While there are no legal mandates requiring the use of green energy, the regulatory environment strongly encourages it. Coupled with growing pressure from customers and investors to meet global ESG standards, these measures are positioning India as a compelling destination for sustainable data centre investment.
India’s regulatory landscape for data centres is set for major change.
These regulatory changes may present new compliance challenges, but they may also drive demand for onshore data storage solutions and create new growth opportunities in the sector.
- The Telecommunications Act 2023 (Telco Act) establishes a new framework for the regulation of telecommunications networks and services, which may be relevant to data centre operators supporting telecommunications infrastructure and services. A number of the operative portions of the Telco Act have been brought into force by way of the related notification of operational rules.
- The Digital Personal Data Protection Act 2023 (DPDP Act) introduces new data protection requirements across the board and will be effective from May 2027.
- Targeted data localisation requirements in sectors like financial services and telecommunications are prompting companies to expand local storage capacity.
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Unlocking opportunities and navigating challenges
