By Dnyanesh Nirwan, Managing Director at Alvarez & Marsal
India’s digital economy is creating one of the most significant infrastructure opportunities of the coming decades. A&M estimates that cumulative investment in the country’s data centre ecosystem could reach up to $1 trillion by 2047, with installed data centre capacity expanding from approximately 1.5 GW today to 10 GW by 2031, 19 GW by 2037 and 43 GW by 2047. The expansion will extend far beyond the construction of server halls. It will require large investments in campuses, power infrastructure, cooling systems, fibre networks, and compute hardware. The opportunity is already taking shape, with more than $50 billion of committed investments which are currently in different stages of development across the country.
A&M analysis of the market reveals that in the near term (2031), demand may be driven by cloud adoption, enterprise digitization, data localization, digital payments, GCC workloads, and the first wave of AI use cases. India currently generates more than 20% of global data while accounting for only about 3% of global data storage capacity, highlighting a significant infrastructure gap. During the next phase (2032-37), enterprise AI is expected to move from pilot deployments to production-scale implementation, regulated sectors will require sovereign compute, and larger AI-ready campuses will be a part of our landscape.
By 2047, India could emerge as a destination for global workloads, provided it successfully delivers in previous two horizons and maintains its competitiveness on a long-term basis.
India’s value proposition extends beyond demand growth. It combines scale, cost advantage, and strategic relevance. The country is among the lowest cost markets for data centre construction, with construction costs 50-60% below mature hubs such as Tokyo, West Asia, Singapore and North America5.
It also benefits from electricity tariffs that are 40% lower and skilled manpower costs that are nearly 75% lower; in addition to a large pool of engineering talent. This gives India the potential to become a serious contender as a global digital infrastructure hub.
As India’s data-centre capacity expands from 1.5 GW in 2025 to 19 GW by 2037, the sector could create nearly 850,000 cumulative jobs during the construction phase. Approximately 350,000 of these would be direct roles in civil construction, electrical and cooling infrastructure, commissioning and project management, while the remaining 500,000 would arise through indirect and induced effects across manufacturing, logistics, professional services, and broader local economic activity. Once operational, the ecosystem could support more than 35,000 jobs annually, including up to 20,000 highly skilled operational and maintenance roles.
This opportunity also presents a significant boost to the Make in India initiative and for Indian players across the value chain. Capital providers will finance platforms through equity, debt, and long tenor infrastructure capital to players across the value chain. Real estate and industrial groups will aggregate and prepare powered land. EPC contractors could address a cumulative construction opportunity of more than $250–300 billion across civil, electrical, and mechanical packages. Equipment suppliers could participate in a market exceeding $200 billion over the build out period1. Compute hardware providers are likely to capture the largest share as demand for servers, accelerators, storage, and networking equipment accelerates. India’s non-power data centre operations and maintenance (O&M) market alone could exceed $3 billion annually by 2031.
Despite these favourable fundamentals, execution challenges could constrain the pace of capacity expansion. Data centre projects in India typically take 24–30 months from first shovel to operations readiness, compared with 15–20 months global benchmark, due to low construction productivity, land approvals, and a limited pool of experienced contractors especially, in mechanical and electrical works4.
Reliable power supply remains another critical consideration. While national power adequacy has improved, grid reliability remains uneven, with many Indian Discom (distribution companies) still reporting system average interruption duration index (SAIDI) levels of ~129 hours per year with 150+ material interruptions10. Developers must therefore evaluate energization timelines, outage frequency and duration, restoration capability, substation readiness, and supply redundancy. Addressing these constraints will require powered-land development, closer utility coordination, modular construction, early equipment reservations, and deeper specialist EPC and commissioning capabilities.
Furthermore, if India is to move up the value chain and maximize the benefits of this infrastructure buildout, it should also invest in sovereign AI capabilities. Recent international restrictions on access to advanced AI models have demonstrated how quickly technological access can be influenced by geopolitical and policy considerations. Developing sovereign compute infrastructure and indigenous AI capabilities will therefore be critical for regulated sectors, public services, and enterprise applications.
If executed effectively, India’s data-centre sector could become a foundational pillar of the country’s digital economy by 2047. India has the potential to evolve from a large consumer of digital services into a globally significant hub for digital infrastructure and AI-enabled innovation.