Rating agency predicts massive growth for Indian data centre industry

Details: Vaughan O'Grady; Category: Data Centres & Networks; 04 November 2026; 685 views

Crisil Ratings, an Indian a full-service rating agency, says India’s data centre industry is entering what it calls an investment ‘supercycle’. Installed capacity, it notes, is expected to increase five-fold to about 7.5 gigawatts (GW) by March 2030.

In a report published this week it suggests the industry will attract investments of more than INR3 trillion (about US$31.72 billion) over the period under review.

Not too surprisingly, this surge is being driven by generative artificial intelligence (gen AI)-led computing demand, enterprise digitalisation and rising data consumption.

However, as Crisil explains, while long contracts with hyperscalers provide strong cash flow visibility, the pace of this expansion and credit quality of the data centre developers will hinge on timely power connectivity, regulatory approvals and disciplined project execution.

It seems that demand visibility is strong given that this industry is undertaking such a capital-intensive expansion. Nearly half of the upcoming capacity is already committed under long-term contracts, limiting speculative development and reducing offtake risk.

And the financial outlook appears to be positive. As Crisil says, upfront tie-ups with hyperscalers, driven by cloud adoption and compute-intensive gen AI workloads, provide revenue certainty from the outset. This, it explains, helps de-risk projects, even as the scale and speed of the planned build-out intensify execution requirements.

Costs are attractive too. Anand Kulkarni, Director, Crisil Ratings, explains: “India’s structural cost advantages further strengthen its attractiveness as a data centre destination. Development costs are around one-fifth lower than in several competing Asia-Pacific markets owing to more competitive land, construction and labour costs. Combined with lower power tariffs, this translates into rentals that are 30-35% lower than in peer markets. The ability to develop large, renewable-powered campuses also aligns well with the sustainability goals of hyperscalers, reinforcing India’s competitive positioning.”

As for potential issues, the report warns that this unprecedented growth in development is creating a power infrastructure bottleneck. In addition, hyperscaler dominance creates customer concentration and pricing risk for the developers. Also, debt levels will remain elevated over the medium term; investments typically precede cash generation by 24-36 months.

Timely commissioning, cost control, adequate power availability and the sustainability of genAI-led demand growth will therefore remain the key factors determining how successfully the industry navigates this investment cycle.

The report does mention power issues but potential public concerns about the effect on the environment and water resources (in India and elsewhere) of such fast growth do not appear to have been discussed.