India digital boom could hit $230 bn

Surging AI adoption and data centre investment could transform India into a global digital powerhouse, provided critical infrastructure keeps pace

IANS NEW DELHI

India’s digital transformation market could reach $229.59 billion by 2029, driven by rapid adoption of artificial intelligence, cloud computing, enterprise digitisation and expanding digital public infrastructure, according to a report released on Monday.

The smallcase report projects annual growth of between 20.63% and 32.1% through 2029, as rising technology investment pushes India towards becoming a major global hub for AI-ready data centre infrastructure.

Operational data centre capacity is expected to exceed 2 gigawatts (GW) by the end of 2026, compared with about 1.6 GW currently. The expansion is supported by more than $30 billion in confirmed capital expenditure and an investment pipeline approaching $60 billion.

By 2030, operational capacity could reach 4.5-7 GW as investment in artificial intelligence and cloud infrastructure accelerates. Some industry estimates put the potential even higher, at around 7.5 GW. 

The Ministry of Electronics and Information Technology expects total investment in India’s data centre ecosystem to exceed $200 billion, the report said, with nearly $70 billion already at various stages of construction.

Artificial intelligence is emerging as the biggest driver of additional data centre requirements.  India accounted for 46.2% of AI activity across the Asia-Pacific region and recorded more than 82.3 billion AI transactions during the second half of 2025. Mumbai remains India’s largest data centre market, while Hyderabad is developing into an important alternative, supported by lower infrastructure costs, connectivity and relatively lower seismic risk.

The investment cycle could also deliver substantial employment benefits. India’s data centre ecosystem could generate nearly nine million direct and indirect jobs by 2030 across engineering, manufacturing, logistics and technology services.

However, rapid expansion brings significant infrastructure challenges. Power availability, limited fibre penetration, fragmented regulatory approvals, shortages of specialised AI infrastructure talent and requirements for advanced cooling technologies could constrain growth. Strengthening electricity supply, fibre networks, regulatory efficiency and high-density AI-ready facilities will therefore be critical to sustaining investment.

India’s combination of engineering talent, expanding digital infrastructure, policy support and a substantial investment pipeline provides a strong foundation. Converting those advantages into reliable, scalable infrastructure will determine whether the country can establish itself as a globally competitive AI and data centre hub over the remainder of the decade.