India Set to See Significant Rise in AI Data Centre Deployment, With 700,000 GPUs to be Installed Over Next Five Years: Avendus Report

India's Data Centre Capacity to Nearly Triple by 2030

India's data centre capacity is expected to nearly triple over the next five years, driven by rising artificial intelligence (AI) adoption and cloud demand, creating a $23 billion investment opportunity, according to a report by Avendus Capital released on May 27.

The investment bank, in the third edition of its annual data centres report, said India could see deployment of 650,000-700,000 graphics processing units (GPUs) across data centres over the next five years as enterprises ramp up AI consumption. This massive growth is expected to be driven by the increasing demand for AI-focused data centre capacity, with nearly 1 GW of such capacity currently in the active pipeline.

Key Statistics

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Developers currently have an active pipeline of more than 3 GW, including nearly 1 GW of AI-focused data centre capacity. This expansion will require capital investments of nearly $23 billion over the next five years.

The report highlighted GPU infrastructure as an emerging high-return segment within the broader data centre ecosystem. According to the report, large-scale GPU deployments can generate equity internal rates of return (IRRs) of more than 28 percent at current capex and pricing levels.

Vaibhav Garg, Director, Infrastructure & Real Assets Investment Banking, Avendus Capital and chief author of the report, said that AI adoption is emerging as a significant catalyst for next-generation infrastructure investments in data centers, alongside sustained demand from cloud and digital workloads. This dual demand trajectory has already translated into $5 billion of transaction activity over the last three years, with backing from global institutional investors, infrastructure funds, and strategic operators.

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Garg added that public markets and strategic transactions are also expected to play a larger role in funding the sector's growth, with 3-4 data centre IPOs likely over the next three years.

The report noted that private market activity in the sector is also increasing globally, with data centre transactions currently taking place at EBITDA multiples of 20-30x. Structures such as REITs and InvITs are also being explored for capital recycling due to the sector's long-term contracts and predictable cash flows.

India's AI market is expected to grow from $13 billion in 2025 to $131 billion by 2032 at a CAGR of around 39 percent, supported by enterprise adoption and investments in domestic AI capabilities, including indigenous large language models (LLMs).

The report further said that more than 38,000 GPUs have already been committed under the IndiaAI Mission, of which over 22,000 are expected to be allocated for AI workloads in the near term. This is expected to drive demand for high-density, liquid-cooled and AI-ready data centre infrastructure across the country.

Mumbai Leads Data Centre Capacity

Mumbai emerged as the country's largest data centre hub, accounting for nearly half of India's installed capacity. The city will continue to see around 47 percent of the additional data centre capacity being built over the next five years coming to India. As of now, Mumbai has about 801 data centres, followed by Chennai with 268 data centres, Delhi NCR with 161 data centres, and Hyderabad with 138 GCCs.