Schneider Electric expects India's data centre segment to become one of its fastest-growing areas over the next four to five years, driven by AI-ready infrastructure investments and digital capacity expansion in the country.

Current data centre capacity is projected to reach 1.7 to 2.0 GW by end-2026, signaling roughly 30% year-on-year growth.

India’s data-centre market is expanding beyond traditional metro clusters into tier-two and tier-three cities, as deployment costs per megawatt run at least 30% below the global average, enabling faster capacity build-out.

A key challenge cited is execution complexity due to fragmentation across construction, cooling, technology, and operations, which causes delays and unclear accountability.

ESG considerations are shaping investor sentiment, pushing for renewable energy integration, energy efficiency, and sustainable infrastructure models.

KPMG advocates an integrated lifecycle partner model where a single provider handles land, power, AI deployment, compliance, and maintenance.

Industry leaders say execution capability will be as important as capacity, given rising deployment complexity across AI readiness, regulatory compliance, operational efficiency, capital structuring, and ESG priorities.

An integrated national approach is deemed necessary, involving government, private industry, infrastructure providers, telecoms, renewable energy stakeholders, and research institutions to capitalize on hyperscale data centres and colocation markets.

States such as Maharashtra, Telangana, Andhra Pradesh, Tamil Nadu, and Uttar Pradesh are expected to lead capital inflows thanks to supportive policies, tax incentives, and regulatory reforms in Budget 2026-27.

Hyperscale operators and global cloud providers have pledged about $67.5 billion, led by commitments from Microsoft, Amazon, and Google.

Opportunities for startups exist in energy management, cooling efficiency, power procurement platforms, and capacity planning services alongside traditional AI software developments.

Policy support and data localisation strengthen the investment case, with data centres gaining infrastructure status to improve financing access; states compete with incentives, land, and lower power tariffs to attract investment.