Avendus Capital, India’s leading investment bank, has released the third annual edition of its Data Centres report, examining how rising AI adoption could drive deployment of 650,000 – 700,000 GPUs in India’s data centres over the next five years, creating a USD 23 bn investment opportunity. With this, India’s data centre capacity is set to grow at a 26% CAGR over the next five years.
The report highlights that AI-led infrastructure demand alongside rising cloud and digital adoption is expected to nearly triple India’s built data centre capacity from 1.6 GW in 2025 to ~5 GW by 2030. Developers currently have an active pipeline of over 3 GW, including ~1 GW of AI data centre capacity, requiring a total capital investment of nearly USD 25 bn over the next five years. Mumbai is expected to remain India’s largest data centre hub, contributing to nearly half of the country’s installed and upcoming capacity over the next five years.
A key insight is the emergence of GPU infrastructure as a high-return generating segment within the Indian data centre ecosystem. At current capex and pricing levels, large-scale GPU deployments can deliver equity IRRs of over 28% (hold-to-maturity).
Vaibhav Garg, Director, Infrastructure & Real Assets Investment Banking, Avendus Capital and chief author of the report said, “AI adoption is emerging as a significant catalyst for next-generation infrastructure investments in data centers, alongside sustained demand from cloud and digital workloads. This dual demand trajectory has already translated into USD 5 bn of transaction activity over the last three years, with backing from global institutional investors, infrastructure funds, and strategic operators. Going forward, we also expect public markets and other strategic transactions to play a key role in funding India’s data centre growth, with 3-4 IPOs expected in the next three years.”
The report also highlights rising private market activity in the sector, with global data centre transactions currently being consummating at EBITDA multiples of 20–30x. REITs and InvITs are increasingly being explored as capital recycling structures, given the sector’s long-term contracts and stable cash flow profile.
India’s AI market is projected to grow from USD 13 bn in 2025 to USD 131 bn by 2032 at a ~39% CAGR, supported by rising enterprise adoption and investments in domestic AI capabilities, including the development of indigenous large language models (LLMs). The report further notes that over 38,000 GPUs have already been committed under the IndiaAI Mission, with over 22,000 of these allocated to AI workloads and to be deployed in the near term. This has created substantial demand for high-density, liquid-cooled, AI-ready data centre capacity across India.|
