Rising AI, Data Centres to Accelerate Power Demand in India, Says Report

The surge in demand for electricity in India between 2025 and 2030 is expected to touch 817 twh (trillion-watt hours). So far, around one-fifth will be accounted for by artificial intelligence-related workload, which includes data centres, reported Business Standard citing a report by Indian Capital Management, part of America-based investment management company India Capital Management LLC.

The report indicated that the share of artificial intelligence-related power demand will become even larger after 2030, when the country will see greater increase in data capacity. The earlier forecast in 2023 had projected incremental electricity demand in 2030 at 661 twh. 

Business Standard further stated that the overall incremental increase in electricity demand in India between 2025 and 2030 is expected to be 32% higher than that of the United States (US).

One key element in this emanates from India’s data centres, which will see an expansion, especially with announcements from Google, Microsoft and Amazon in the past few weeks.

The increase in data capacity, the report says, will go up much faster than in the US, and will be up fivefold between 2025 and 2030 — from 1,668 Mw to 8,120 Mw. In contrast, in the same period the US will see a threefold increase in data capacity.

The reasons are manifold. First, the rapid growth in internet, mobile and digital transactions, has made India account for one-fifth of global data consumption. The country has also become the largest ChatGPT user base outside the US, holding an 8% share of global consumers.

Second, India is seeing a rapid rise in enterprise digitisation and cloud adoption and the policy push of the government has helped in encouraging data localisation and domestic storage.

Meanwhile, there has been an expansion in hyperscalers and edge data centres to reduce latency, which has pushed demand for more capacity.

In addition, India is emerging as a global hub for data processing and storage, given the cost advantage as well as a lot of renewable capacity coming up.

The report further estimated that there will be a 2.5 times capex increase in the next five years compared to the past five years, with a requirement of $450bn-500bn financing opportunity, reported Business Standard.

AI Market to Surge

India is rapidly capitalising on this digital wave. Poised to become one of the fastest-growing leaders in artificial intelligence (AI), India’s AI market is expected to reach $20-22bn by 2027, posting CAGR of 30%, according to a report published by Deloitte in May 2025.

However, despite hosting nearly 20% of the world’s data, India has just 3% of the global data centre capacity. The gap between India’s AI aspirations and compute infrastructure presents a strategic opportunity and a national imperative to build AI data centres at scale. Given the rising demand, India must boost its AI-ready infrastructure.