India has the potential to emerge as a key data centre hub in the Asia Pacific region, provided it can resolve complex power and grid challenges and align renewable integration with rapid digital growth, according to a Deloitte report.
While India accounts for nearly 20% of global data consumption, it hosts less than 5% of the world's data centres, underscoring significant headroom for expansion, said Debasish Mishra, Chief Growth Officer, Deloitte South Asia, dwelling on details of the report brought out at India AI Impact Summit.
India, he said, has a "rare structural opportunity" to emerge as one of the world's leading data centre hubs.
Structural advantages such as lower construction and land costs, competitive power tariffs and a large AI-skilled workforce position the country favourably.
Policy support is also strengthening, with Budget 2026-27 proposing a tax holiday until 2047 for foreign companies offering cloud services globally from India, along with preferential tax treatment to incentivise data centre investments.
The report said Asia Pacific is projected to attract about $800 billion in data centre investment by 2030, raising its share of global capacity to 40% and making it the largest market outside North America. India is seen as one of the strongest contenders to capture a significant portion of this growth.
Mishra said India's data centre capacity is expected to expand from around 1.5 GW in 2025 to 8-10 GW by 2030. "AI-driven expansion will sharply increase electricity demand."
AI-linked data centre build-out could require an additional 40-45 terawatt hours (TWh) of power by 2030, up from 10-15 TWh in 2024, lifting the sector's share of national electricity consumption from about 0.8% to 2.5-3%.
AI-focused racks can consume 10-15 times more power than traditional racks, intensifying energy requirements. Although India benefits from relatively low electricity costs and a comparatively modern grid, rapid capacity addition could create a supply gap if generation and transmission infrastructure do not scale in tandem, he said.
Data centres require dedicated, uninterrupted power supply with minimal transmission losses. However, variations in renewable banking rules, open access charges, cross-subsidies and tariffs across states create uncertainty for developers.
Major data centre hubs such as Maharashtra, Tamil Nadu, Uttar Pradesh, Karnataka, Telangana and Andhra Pradesh could each see an additional 2-3 GW of peak demand by 2030, equivalent to 5-20% of their current peak load, placing pressure on state grids.
"India has a rare structural opportunity to rise as one of the world's leading data centre hubs, powered by its cost competitiveness, deep talent and rapidly expanding renewable energy base. The defining moment will be how swiftly power availability and transmission readiness scale with the country's digital ambition," he said.
With the right alignment of policy, grid infrastructure and renewable deployment, India can build AI infrastructure that is globally competitive, sustainable and future-ready, and position itself at the heart of the next era of digital growth, he said.
The report flagged several structural challenges in powering AI-led data centre growth in India. While new data centres are expanding rapidly, power generation capacity is not keeping pace, creating a potential energy supply gap.
Grid stability limitations and constrained substation capacity in high-growth corridors could further strain operations. Transmission upgrades often have longer development timelines compared to renewable generation projects, leading to bottlenecks.
In addition, regulatory differences across states in renewable banking, tariffs and policy incentives create uncertainty for operators, while the absence of a unified national framework to support renewable integration for data centres remains a key gap.
To address these issues, Deloitte recommended accelerating renewable integration through solar-wind hybrid models combined with storage solutions to ensure round-the-clock reliability for high-density AI workloads.
Expanding long-term green power purchase agreements (PPAs), group captive structures and captive renewable installations can provide tariff certainty and reduce cost volatility.
The report also called for upgrading transmission networks and expanding high-capacity substations near growth clusters, along with the creation of power-ready, dedicated Data Centre Economic Zones equipped with pre-built substations and standardised grid connection timelines.
Standardising state-level renewable banking policies would help create predictable clean power portfolios, while leveraging AI to schedule non-urgent computing tasks during periods of low-cost and high renewable availability could further optimise energy use.
Incentivising decentralised renewable models, including co-located solar and storage infrastructure in emerging data centre corridors, was also highlighted as a key enabler.
If implemented effectively, Mishra said, India can position itself as a global leader in sustainable AI infrastructure while strengthening long-term energy security and supporting its broader digital economy ambitions.
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