The Great Digital Rush
India's digital economy is expanding at a blistering pace. With over a billion active internet users, the rollout of 5G, and a surge in cloud computing and Artificial Intelligence (AI), the demand for data storage and processing has skyrocketed. This
has triggered a massive wave of investment from both global and domestic players. Companies are pouring billions into building hyperscale data centres, primarily concentrated in hubs like Mumbai, Chennai, and Hyderabad. Government initiatives promoting data localisation—requiring Indian user data to be stored within the country—have further accelerated this trend, making data centres a cornerstone of national infrastructure. Recent reports show India’s data centre capacity is projected to grow exponentially, from around 1.6 GW in mid-2026 to an estimated 6 GW by 2029, making it one of Asia's most dynamic digital markets.
An Unquenchable Thirst for Power
These modern cathedrals of data are incredibly power-hungry. The electricity required to run servers, networking equipment, and, most critically, cooling systems is colossal. Projections indicate that the electricity consumption from India's data centres could rise from around 0.8% of the country's total demand currently to as much as 3% by 2030. The growth is particularly sharp with the rise of AI, as a single AI-focused server rack can draw more than ten times the power of a traditional one. This puts immense pressure on a national grid that is still heavily reliant on fossil fuels and faces challenges in ensuring uninterrupted supply. A parliamentary panel has even warned that this concentrated power demand in data centre clusters could strain the country's grid and jeopardise clean energy goals.
The Heat is On
A significant portion of a data centre's energy bill—often up to 50%—is dedicated not to computing but to cooling. Servers generate immense heat, and keeping them within optimal operating temperatures is non-negotiable to prevent hardware failure and ensure performance. India's predominantly hot and humid climate makes this task even more challenging and energy-intensive. Traditional cooling methods, which often use evaporative cooling towers, are also incredibly water-intensive. A typical 1 MW data centre can consume as much as 25 million litres of water annually, a staggering figure in a country already facing significant water stress in many regions. As rack densities increase with AI workloads, conventional air-cooling methods are proving inadequate, forcing a necessary shift in technology.
Pioneering a Greener Digital Future
The industry is acutely aware that this pace of growth is unsustainable without a green transition. A major focus is on adopting advanced, energy-efficient cooling technologies. Liquid cooling, including direct-to-chip and immersion cooling, is emerging as a key solution. These methods are far more effective at heat removal than air, allowing data centres to operate more efficiently and significantly reduce their Power Usage Effectiveness (PUE)—a key metric for energy efficiency. Companies like NTT have already deployed liquid cooling in India, achieving notable improvements in energy use. Furthermore, many state governments are now offering incentives, subsidies, and single-window clearances for data centres that use renewable energy and sustainable practices. Operators are also increasingly signing power purchase agreements (PPAs) to source green energy directly from solar and wind farms.
