NEW DELHI October 3 2025- India Emerges as Global AI Data Centre Powerhouse
Fastest growth in 2025 challenges US and China dominance
India is rapidly emerging as a global hub for artificial intelligence–driven data centres, with multinational corporations and domestic players investing billions of dollars to build facilities designed to meet the soaring demand for AI workloads. Traditionally, the data centre landscape has been dominated by the United States, China, and a handful of mature Asian and European markets. But in 2025, India’s momentum is undeniable, with projections placing it among the fastest-growing markets in the world.
The rise of AI across industries—from healthcare and education to finance and manufacturing—has created an urgent demand for high-performance computing capacity. In response, India has witnessed the development of several large-scale AI campuses. Hyderabad has become a focal point, with CtrlS Datacenters constructing a massive AI-focused facility expected to deliver up to 500 megawatts of IT load. Google has announced a $6 billion investment in Visakhapatnam, Andhra Pradesh, where it will establish one of the largest campuses in the country with AI capabilities at its core. Microsoft has also committed $3 billion to expand its AI and cloud infrastructure nationwide, ensuring India plays a central role in its global network. Analysts estimate that nearly 40 percent of all new capacity in India by 2025 will be dedicated to AI and machine learning workloads.
High-density server racks
Globally, the United States still leads in scale, boasting more than 5 gigawatts of operational AI data centre capacity, with regions such as Northern Virginia, Silicon Valley, and Texas at the forefront. China follows closely with over 3 gigawatts of capacity, supported by government-backed AI zones, although stricter regulations and energy controls have slowed new construction. In contrast, hubs like Singapore and Hong Kong are losing ground due to land shortages and energy constraints, pushing global players to look at India and Indonesia as attractive alternatives. Europe remains strong in markets like Ireland, Germany, and the Netherlands, but environmental regulations and energy limits have capped rapid expansion.
India’s unique advantage lies in its cost competitiveness and renewable energy potential. Building costs are as low as seven dollars per watt, compared with ten to twelve dollars in the United States and even higher in Europe. Additionally, the country’s aggressive push into solar and wind power offers long-term sustainability for these energy-hungry facilities. Meanwhile, India’s data localisation rules compel global companies to expand within its borders in order to serve its population of 1.4 billion.
Challenges Ahead
The journey, however, is not without challenges. AI data centres consume enormous amounts of power and require advanced cooling infrastructure. Many state power grids remain under financial and operational stress, raising concerns about consistent supply. Policy bottlenecks and land acquisition issues can also delay projects. Experts caution that unless transmission networks and energy storage solutions are strengthened, India may face bottlenecks in scaling its AI data ecosystem.
Despite these hurdles, India’s trajectory is clear. While the United States and China remain ahead in terms of absolute capacity, India is now the fastest-growing AI data centre market in the world. By the end of the decade, it is expected to stand shoulder-to-shoulder with the global leaders, transforming itself from an outsourcing destination into a digital powerhouse at the centre of the AI revolution.
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