India can become Asia-Pacific’s data centre hub if power infrastructure gaps are fixed: Deloitte

India has the potential to position itself as a major data centre destination in the Asia-Pacific region, but the opportunity hinges on how quickly it can address power availability, grid readiness, and renewable integration challenges, according to a report by Deloitte. 

The report notes that while India accounts for nearly 20% of global data consumption, it hosts less than 5% of the world’s data centres. This gap, it says, reflects strong headroom for growth. 

Debasish Mishra, Chief Growth Officer, Deloitte South Asia, said India has a "rare structural opportunity" to emerge as one of the world’s leading data centre hubs. Lower construction and land costs, competitive power tariffs, and a large pool of AI-skilled professionals give the country an edge, he said. 

Policy backing is also gathering pace. The Union Budget for 2026-27 has proposed a tax holiday until 2047 for foreign companies providing cloud services globally from India, along with preferential tax treatment aimed at encouraging fresh investments in data centre infrastructure. 

The broader regional context adds to the opportunity. Asia-Pacific is expected to attract around ₹800 billion in data centre investments by 2030, raising its share of global capacity to about 40% and making it the largest market outside North America. India is viewed as one of the strongest candidates to capture a sizeable share of this expansion. 

AI boom to sharply lift power demand 

According to Mishra, India’s data centre capacity is projected to grow from roughly 1.5 GW in 2025 to 8–10 GW by 2030. "AI-driven expansion will sharply increase electricity demand." 

The report estimates that AI-led data centre growth could require an additional 40–45 terawatt hours (TWh) of electricity by 2030, compared with 10–15 TWh in 2024. This would raise the sector’s share in national power consumption from about 0.8% to between 2.5 and 3%. 

Energy intensity is a key concern. AI-focused racks can consume 10–15 times more electricity than conventional racks. Although India benefits from relatively low power tariffs and a comparatively modern grid, rapid capacity addition without matching growth in generation and transmission infrastructure could result in supply gaps. 

Data centres require reliable, uninterrupted electricity with minimal transmission losses. However, variations in renewable banking norms, open access charges, cross-subsidies and tariffs across states create uncertainty for developers and operators. 

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. This could amount to 5–20% of their current peak load, adding pressure on already stretched 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. 

Grid constraints and policy gaps in focus 

The report underlines that while new data centres are coming up quickly, power generation capacity is not expanding at the same pace, raising the risk of an energy shortfall. Grid stability constraints and limited substation capacity in high-growth corridors may further affect operations. Transmission projects often take longer to execute than renewable generation projects, creating bottlenecks. 

Regulatory differences across states in renewable banking rules, tariffs, and policy incentives also add complexity. The absence of a unified national framework to support renewable integration for data centres is flagged as a major gap. 

To bridge these issues, Deloitte has suggested accelerating renewable integration through solar-wind hybrid models supported by storage systems to ensure round-the-clock supply for high-density AI workloads. Expanding long-term green power purchase agreements, group captive models, and captive renewable installations can offer greater tariff certainty and reduce exposure to price volatility. 

The report also recommends strengthening transmission networks and expanding high-capacity substations near data centre clusters. It proposes the creation of dedicated Data Centre Economic Zones with ready power infrastructure, pre-built substations, and standardised grid connection timelines. 

Standardising renewable banking policies across states would help operators build predictable clean energy portfolios. In addition, the use of AI tools to schedule non-urgent computing tasks during periods of lower power tariffs and higher renewable availability could improve overall energy efficiency. 

Incentives for decentralised renewable models, including co-located solar and storage systems in emerging data centre corridors, are highlighted as another important step. 

With the right mix of policy coordination, grid upgrades and renewable deployment, Mishra said India can build globally competitive and sustainable AI infrastructure. If executed effectively, this could help the country secure a leadership position in sustainable data centre development while strengthening long-term energy security and advancing its digital economy ambitions. 

(With inputs from PTI)