Fueled by surging artificial intelligence (AI) integration, hyperscale cloud growth, and mounting corporate requirements, India has established itself as the second-largest data center market in the Asia-Pacific (APAC) region. According to Cushman & Wakefield’s “Global Data Center Market Comparison 2026” report, the nation now boasts 1.6 gigawatts (GW) of active capacity and stands as a premier growth hub for digital infrastructure.

India also ranks among the top three markets globally for its development pipeline, currently holding 3.1 GW in planned and under-construction projects. The comprehensive report assessed 107 worldwide markets using 24 metrics—including power infrastructure, real estate fundamentals, regulatory frameworks, operational risks, and development momentum—to forecast global dynamics.

Globally, the industry is navigating an expansion era marked by AI and cloud needs stretching power grids and construction schedules. The report notes that while demand remains robust, market competitiveness now relies heavily on power availability, execution capabilities, land access, and regulatory preparedness. Dallas secured the top spot globally as a primary market for the 2026 edition, trailed by Atlanta, Virginia, Columbus, and Johor. Within APAC, only Johor and Sydney made the global top 10 for primary markets.

The report categorized markets into primary, secondary, and tertiary tiers. While primary locations still draw massive investments due to their maturity, development focus is increasingly pivoting toward secondary and tertiary markets. India’s robust ecosystem spans several assessed cities: Mumbai, Hyderabad, Chennai, Delhi NCR, Pune, and Bengaluru.

Mumbai continues to anchor India’s standing as a primary market in APAC and is projected to exceed 1 GW of operational capacity by the close of 2026, marking it as one of the region’s fastest-growing hubs. Meanwhile, secondary markets are experiencing heightened investment. Hyderabad emerged as APAC’s leading secondary market and placed ninth globally among secondary cities. Chennai, Delhi NCR, and Pune are also seeing strong development activity, while Bengaluru is designated as a tertiary market. Emerging cities like Vizag are positioning themselves as future AI hubs to accommodate next-generation digital architecture.

Hyperscaler demand—especially for AI workloads and major cloud rollouts—is significantly driving capacity expansion across the country, particularly in Mumbai, Pune, and Hyderabad. The nation’s long-term trajectory is further bolstered by more than 10.5 GW of capacity currently in the land acquisition phase.

Despite the rapid growth, the report indicates India remains structurally underpenetrated. The country’s data center density sits at approximately 943,000 people per megawatt (MW), leaving ample room for expansion. Strong absorption rates pushed vacancy levels down to 12.9% in the fourth quarter of 2025, underscoring healthy demand fundamentals.

Broader APAC operational inventory grew by 13% over the year, adding more than 1.5 GW. Across the region, robust occupier demand drove vacancy rates down from 12.4% to 10.9%. Regional development pipelines are expanding at roughly 20% year-on-year, with almost all under-construction capacity pre-committed and most new facilities fully leased prior to completion.

Regulatory frameworks and power metrics further shape the national outlook. The Draft National Data Centre Policy 2025 proposes tax exemptions lasting up to 20 years, alongside GST input tax credits on capital expenditures, indicating strong governmental support. On the energy front, India ranked fourth worldwide for electricity production growth between 2022 and 2025. Yet, the report highlights an ongoing need for grid efficiency enhancements, as transmission losses remain elevated at 14.2%.

“The global data centre sector is moving into a more execution-driven phase of growth, where access to power, infrastructure readiness and delivery capability are becoming as important as demand itself,” said Gautam Saraf, Executive Managing Director, Mumbai & New Business, Cushman & Wakefield.

“India is well positioned within this shift given its combination of strong demand visibility, expanding development pipeline, and growing multi-market ecosystem across both primary and emerging locations,” Saraf added.