Fuelled by the increasing adoption of Artificial Intelligence (AI), the data centre industry in India is projected to add 791 megawatts (MW) capacity by 2026, which will drive a demand for 10 million square feet of real estate space, attracting investments worth $5.7 billion, a report showed on Friday.

As usage of AI gains pace, the demand for Indian data centres is expected to be in the range of 650-800 MW during 2024-26, according to the report by JLL Research.

India is poised to be the third-largest economy, with a projected $5 trillion GDP by 2027 with digital economy contribution of around 20 per cent.

“This digital expansion is anticipated to propel the growth of India's data centre industry, projected to increase from 853 MW in 2023 to 1,645 MW by 2026. This increase in capacity will require an investment of $5.7 billion and approximately 10 million square feet of real estate,” said Dr Samantak Das, Chief Economist and Head of Research & REIS, India, JLL.

The country’s focus on AI is evident through the India AI mission, aimed at fostering innovation, upskilling the workforce, and ensuring responsible and ethical deployment of AI technology.

The country's data centre sector expanded from 350 MW in 2019 to 854 MW in 2023, in line with the increasing digital usage trends.

According to the findings, Cloud Service Providers (CSPs), who essentially offer IT infrastructure systems primarily for data storage and computing power accessible through the Internet, have realigned their requirements to factor in AI-led demand.

In Mumbai, absorption nearly doubled during this period as CSPs renewed their pace of absorption.

“The exponential growth in processing power and data volumes, driven by AI, necessitates the development of new data centres capable of meeting energy, processing, and cooling needs,” said Rachit Mohan, APAC Lead–Data Centre Leasing and Head-Data Centre Advisory, India, JLL.