India's data center market, valued at $7 billion in 2023, is projected to grow at a compound annual growth rate (CAGR) of 8%, reaching $8 billion by 2025, according to a report.

Moreover, the country’s data center capacity is anticipated to increase from 1,150 MW in 2023 to 1,700 MW by 2025, representing a strong growth rate of 22%, as detailed in the report by 1Lattice, a technology-driven market intelligence firm.

With a growing number of data centers concentrated in Mumbai, Delhi-NCR, and Bengaluru, the report outlined how these cities have become central hubs for colocation services, accounting for over 55 percent of the country's capacity.
"The surge in data consumption, the rise of emerging technologies, and strong government support are converging to make India one of the fastest-growing data centre markets in the world", said Abhishek Maiti, Director-Technology and Internet at 1Lattice.

The report also emphasized the critical role of government initiatives like the 'Data Centre Incentivization Scheme' and 'Make in India' in boosting the data centre sector.

"Investments in infrastructure, technology, and sustainability will be key drivers of this transformation", said Maiti.

Globally, the data center market is expected to grow from $227 billion in 2023 to $250 billion by 2025, driven by the global adoption of cloud computing, edge technologies, and AI/ML, reshaping how industries manage and store data. India can add 500 MW of data center capacity over the next four years. The data center sector has experienced significant growth, doubling from 540 MW in 2019 to 1,011 MW in 2023, positioning India as one of the fastest-growing markets worldwide. In the first half of this year, the country witnessed a 21% increase in data center absorption, driven by rising demand for edge data centers in tier 2 and tier 3 cities.