India Data Centre Capacity to Grow Six-Fold by 2031

Morgan Stanley projects that India's data centre capacity will grow nearly six-fold, increasing from 1.8 GW to approximately 10.5 GW by FY2031. AI workloads are expected to drive the bulk of this expansion, accounting for roughly 6.8 GW of the total growth as the country increases AI adoption and implements data localisation policies to ensure low-latency processing.

This trajectory is supported by an estimated $60 billion industrial capital expenditure pipeline for infrastructure, which includes $20 billion dedicated to the power ecosystem. The growth is further enabled by the Government of India through fiscal incentives and the granting of infrastructure status to data centres.

Despite the optimistic projections, the report identifies significant hurdles to scaling. The primary challenges include the necessity for more cost-effective power sources and a continued reliance on imported high-end computing hardware. Overall, the investment bank estimates that data centres, defence, and energy transition projects will capture 60% of India's incremental capital expenditure through 2030.