India's Data Centers to Consume 191 TWh Power by 2040
According to a report by Wood Mackenzie, India's operational data center capacity is anticipated to grow over five times to 12 GW by 2030, up from 2.2 GW in 2025, fueled by the swift adoption of artificial intelligence (AI), cloud computing, and the nation's growing digital economy.
The report, India's Data Center Landscape: Powering the Digital Economy, predicts the sector will experience a compound annual growth rate (CAGR) of approximately 40 percent throughout the period. AI-specific capacity is anticipated to increase almost 24 times, growing from 275 MW in 2025 to 6,546 MW by 2030.
"India's data center market has become a structural investment thesis," says Souhardya Pal, Research Associate at Wood Mackenzie.
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"The convergence of hyperscale capital, AI workload growth and a decade of policy support has created the conditions for India to rival any market in Asia-Pacific."
The report states that India's digital economy, projected to be worth INR 32 trillion by 2025, accounts for approximately 12 percent of the nation's GDP. The nation boasts over 1.03 billion active internet users and handles almost 22 billion UPI transactions each month.
Simultaneously, India's internal AI market is expected to hit INR 11.7 trillion by 2032, increasing the need for advanced computing infrastructure.
Wood Mackenzie predicts that power usage by data centres will increase nearly twenty times, growing from 10 TWh in 2025 to 191 TWh by 2040, representing about seven percent of India's overall electricity requirement.
Currently, Maharashtra and Tamil Nadu represent almost 65 percent of the total IT load, but the report anticipates that the next phase of capacity growth will include Andhra Pradesh, Telangana, Uttar Pradesh, and Karnataka. These regions are drawing investments from international hyperscalers like Amazon Web Services (AWS) and Google, as well as local players such as AdaniConnex, which has revealed a 2.6 GW development pipeline.
The report said access to reliable and affordable power has emerged as the biggest determinant of data center investments, overtaking land availability and capital.
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"Land and capital are no longer the limiting factors for data center developers in India. What determines site selection and delivery timelines now is access to firm, round-the-clock power at the node level," says Dr. Rashika Gupta, Vice President of Research at Wood Mackenzie.
Developers are increasingly choosing captive power generation and long-term renewable power purchase agreements (PPAs) to ensure electricity supply, reduce operating costs, and achieve sustainability goals. According to the report, states that implement liberal open-access policies and have competitive transmission fees are expected to draw a greater portion of future investments.
The report additionally recognized water availability as a rising issue for the industry. With the rise of AI-driven workloads boosting cooling demands, water availability is emerging as a crucial factor in site selection, especially in water-scarce regions like Tamil Nadu and Karnataka.
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Developers utilizing closed-loop cooling systems and zero liquid discharge technologies are anticipated to be more equipped to handle future regulatory and resource challenges.
As per Wood Mackenzie, India's blend of strong digital demand, favorable governmental policies, growing renewable energy sectors, and swift AI integration ranks the nation among the globe's quickest-growing data center markets. Nonetheless, sustained competitiveness will hinge on developers' capacity to obtain dependable energy, oversee water resources, and choose locations resilient to infrastructure challenges.