BENGALURU, India: Mumbai is India’s busiest data centre hub with 61 sites that provide services for global firms including Amazon, Google and Microsoft.
These data centres pull power from the electricity grid that also supports 20 million commercial and residential users.
And Mumbai’s grid must be braced for even more demand by 2030 as temperatures are climbing – by then, data centres could consume a third of the electricity produced in the city.
Mumbai’s dilemma is a snapshot of India’s nationwide challenge amid a data centre boom as demand for artificial intelligence and cloud computing applications expands rapidly.
India has around 270 data centres, which consume 0.5 per cent of the electricity generated in India at present but are expected to consume around 3 per cent by 2030.
By comparison, the United States has more than 4,000 data centres, which took up more than four per cent of the country’s total electricity consumption in 2024, according to the International Energy Agency. And this proportion could more than double by 2030.
But the US has a far larger grid, generating about 4,500 terawatt-hours (TWh) of electricity per year in 2025 compared with India’s 1,900TWh.
Experts and government authorities are realising that India’s physical power infrastructure could come under severe strain to meet this highly concentrated – and rapidly growing – demand for energy for high computational workloads coming from data centres.
India’s data centres have a total capacity of 1.5 gigawatts (GW) – which is set to grow to 13.2GW by 2032, according to the Ministry of Electronics and Information Technology’s estimates.
This is driven by 800 million internet users, rapid adoption of AI and the increasing global reliance on cloud services.
Amazon Web Services is investing US$12.7 billion to build cloud computing centres in Mumbai and Hyderabad.
Google is spending US$15 billion on an AI data hub in Visakhapatnam in Andhra Pradesh, the biggest investment in India to date.
Major Indian corporations including Reliance Industries, AdaniConneX, Tata Consultancy Services and Bharti Airtel are also setting up enormous data centres.
Industry experts also expect that as a result of the current Middle East crisis, Gulf-based clients and global hyperscalers will turn to India as a locational hedge to diversify their data centre exposure.
Hyperscalers are companies, such as Amazon and Google, that operate the biggest data centres for cloud computing and AI, which contain thousands of servers.
Co-founder and chief executive of Yotta Data Services Sunil Gupta said in a company statement that since March, there has been a sharp rise in inquiries to set up data centres in India, with capacity requirements ranging between 200 and 500 megawatts (MW).
He believes that companies are reworking their infrastructure to hedge against geopolitical risks.
India’s challenge is beefing up its power supply and grid capacity to accommodate these large computing clusters.
Powering up
One AI-focused 100MW data centre consumes as much electricity as around 100,000 American households and almost 750,000 Indian households that consume far less electricity (97kWh).
Meanwhile, the authorities still struggle to keep the lights on in many cities and towns, with many of them facing regular power cuts.
A parliamentary panel warned in March that the highly concentrated power demand in areas where data centres now cluster can strain the country’s grid.
It also threatens India’s clean-power ambitions as data centres depend on grids that run mostly on coal-fired energy.
“Data centres are very power-hungry and consume more electricity than many of our cities. As more people are using AI now, more queries mean more analyses and that will translate into 20 to 30 times more power consumption in the future,” Narendra Sen, founder of NeevCloud, an AI cloud-service provider, warned.
Such massive and continuous power demand creates additional strain on local electricity grids, especially in regions where data centres are clustered together.
To address the power challenge, the government authorities as well as data centre builders are now urgently planning to expand transmission lines, scout new locations and speed up the shift to renewable energy sources.
Branching out
In addition to Mumbai, other data centre hubs such as Hyderabad (with 33 data centres), Delhi-National Capital Region (31), Bengaluru (31) and Chennai (30) are already straining under power and water issues.
“These locations were picked for their nearness to undersea fibre cables that transfer data, especially for offshore clients like hyperscalers. These cities also have the availability of good talent. But given that they are high-demand areas, there is now a lot of discussion about moving the new data centres 100-200km away,” said Vibhuti Garg, director (South Asia), Institute for Energy Economics and Financial Analysis (IEEFA), a global clean energy think-tank.
With data centres already consuming up to 15 per cent of local grid capacity in some areas, industry leaders suggest expanding outside metropolitan cities to ease pressure on the grid.
NeevCloud, for instance, provides AI cloud computing data centres in Indore and Raipur in central India because they are located in low seismic zones, have adequate land parcels and can buy renewable energy from nearby states, which is 30 per cent cheaper and more sustainable than pulling from the local grid, Sen said.
While there are no industry-wide estimates for the current proportion of renewable energy used by data centres, some leading players like STT GDC and Nextra do meet around 40 per cent of their energy usage from non-fossil sources. However, most are highly reliant on fossil fuel-based power on the grid.
“Some clients do resist the change, but the lower cost and shorter timeline to build outside cities usually convince them,” said Sen, likening the shift to that of the data centre market moving in the US from Northern Virginia to Texas, which has cheaper, abundant land and readily available power supply.
“With AI use, the scale of data centres has grown. While metropolitan markets remain the anchor for cloud, financial services and latency sensitive workloads, AI training is increasingly enabling deployments on larger land parcels in adjacent corridors where fibre connectivity has matured and logistics have improved,” Surajit Chatterjee, managing director (Data Centre) of CapitaLand Investment, said.
The Singapore-based real estate major announced the development of four data centres in 2021 across Mumbai, Hyderabad, Chennai and Bengaluru, with a combined capacity of 244MW through a phased investment of about US$1 billion.
It plans to double its India capacity to around 500MW by the end of the decade, and is evaluating locations in and around Mumbai and Hyderabad, Chatterjee said.
The Indian government’s 20-year tax holiday till 2047 for foreign cloud service providers, announced in the 2026 budget, as well as the discounted power tariffs and capital subsidies offered by states like Tamil Nadu and Andhra Pradesh are also encouraging clients to set up enormous units. These will have to be set up in less densely populated regions.
“Hyperscalers have to diversify, decentralise and find new locations to be sustainable. There’s two ways about it,” said Sen, who is also scouting for inactive mines in central India to set up underground data centres that can be easier to keep cool and thus save energy.
Grid expansion can’t match demand
Non-metropolitan areas, however, lack adequate power transmission infrastructure.
State power distribution companies have been unable to keep up with the increasing demand, said Garg.
As India’s power grid was not designed to handle the round-the-clock, high-load demand like that from modern data centres, computing service companies have been entering into corporate power purchase agreements (PPAs).
These are long-term contracts where businesses buy renewable electricity directly from generators at a pre-agreed price.
But the success of PPAs is constrained because the transmission networks are not keeping pace with the installation of renewable energy deployment.
This means it is proving difficult to move power from renewable energy generation hubs such as Gujarat and Rajasthan to demand centres like Visakhapatnam.
India has been upgrading power transmission and distribution systems since 2024, but these efforts have been plagued by implementation delays, IEEFA’s research on power infrastructure found.
Only 42 per cent of the targeted 15,253 circuit-km of transmission lines have been commissioned, including only 3,253 circuit-km of interstate transmission lines added.
As utilities must invest large sums to expand power infrastructure, experts believe it could reduce electricity available for local users, or tariffs could be increased as the extra expense is passed on to consumers.
Energy-efficient cooling
Meanwhile, bigger players like Reliance and Adani are moving towards setting up dedicated clean energy power plants for their own data centres.
“Sustainability is becoming a mandate now, for both environmental and operational reasons. Industry bodies and hyperscalers are working closely with the Indian central and state governments to ensure that data centre needs are factored into the evolving renewable energy and digital infrastructure policies taking shape,” said Chatterjee, who is also the co-chair of the National Council on Data Centres at ASSOCHAM, an Indian industry body.
Data centres need energy not just to run the graphic processing units, but also for cooling them. Around 39 per cent of the power consumed by a data centre goes to cooling, while 41 per cent goes to running the servers.
So, data centre operators are also increasingly installing new energy-efficient cooling technology.
“CapitaLand was the first to implement direct-to-chip liquid cooling technology, which cuts water consumption by 30 to 40 per cent and also enabled us to increase rack density from 75kW per rack to 110-120kW (as liquid cooling can efficiently cool more dense racks using less energy). This helps to build AI-led deployment and reduces dependency on traditional water cooling that uses a lot of energy,” said Chatterjee.
But Krishna V. Giri and Payal Seth, fellows at think-tank Pahle India Foundation, said data centres’ energy self-sufficiency should not be left to companies to decide for themselves – regulation must be set in place before the industry is too large.
They wrote in The Week on March 18, 2026: “What India urgently needs is a simple, non-negotiable rule: Every data centre above a defined capacity threshold must be energy self-sufficient... The lights cannot afford to dim for a billion people so that the tech cloud stays bright for the few.” - The Straits Times/ANN
