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India's data centre value chain could generate a cumulative order book worth USD 280 billion by 2035, driven by accelerating artificial intelligence adoption, cloud computing growth and digital transformation initiatives, according to a report by PwC India. The consultancy estimates direct investments of USD 71.6 billion in data centre infrastructure over the period, while the broader ecosystem encompassing IT hardware, electrical systems and cooling technologies presents a significantly larger opportunity. India's installed data centre capacity is projected to increase from around 1.6 GW currently to approximately 13.8 GW by 2035. The report highlights growing demand for advanced cooling technologies to support AI workloads and calls for policy interventions to strengthen domestic manufacturing capabilities and reduce dependence on imported equipment and global supply chains.
India's data centre sector is expected to witness substantial expansion over the next decade, with the broader value chain projected to generate a potential order book of USD 280 billion by 2035, according to a report released by PwC India. The growth is being driven by increasing adoption of artificial intelligence (AI), rapid digitalisation across industries and rising demand for cloud and data processing infrastructure.
PwC estimates that direct investments required to build core data centre facilities will reach approximately USD 71.6 billion by 2035. However, the consultancy noted that the larger economic opportunity lies across the supporting ecosystem, which includes information technology equipment, electrical infrastructure, cooling systems and other specialised components required to develop and operate data centres.
According to the report, India's installed data centre capacity currently stands at around 1.6 gigawatts (GW). This is expected to expand 8.5 times to approximately 13.8 GW by 2035, reflecting the increasing requirements of enterprises, cloud service providers and AI-driven applications.
The largest share of the projected order pipeline is expected to come from IT equipment such as semiconductors, servers and networking systems. PwC estimates that these components will account for 65-75% of overall capital expenditure, creating an opportunity worth between USD 180 billion and USD 210 billion. Electrical infrastructure is expected to generate orders valued at USD 18-26 billion, while cooling systems could account for an additional USD 15-20 billion.
The report noted that the rapid adoption of AI technologies is significantly changing infrastructure requirements within the sector. Conventional air-cooled systems and thermal containment technologies, typically designed to support workloads of 12-18 kilowatts (kW), are becoming inadequate for increasingly intensive AI applications.
PwC stated that hyperscale and enterprise AI workloads now require more advanced cooling technologies. Direct liquid-to-chip cooling systems are capable of supporting workloads of up to 150 kW, while immersion-based cooling solutions can support workloads exceeding 150 kW. These technologies are expected to account for a growing share of future investments in data centre cooling infrastructure as operators adapt facilities to accommodate high-density computing environments.
Despite the significant growth prospects, the report highlighted vulnerabilities within the sector's supply chain. According to PwC, India remains heavily dependent on imported mechanical, electrical and plumbing (MEP) components, many of which are long-lead items susceptible to global supply chain disruptions and geopolitical uncertainties.
The consultancy also pointed to the industry's reliance on international original equipment manufacturers (OEMs) for spare parts, maintenance support and specialised equipment. To strengthen domestic capabilities, PwC recommended introducing a dedicated Production-Linked Incentive (PLI) scheme for data centre equipment manufacturing.
In addition, the firm suggested developing specialised manufacturing clusters under the Make in India initiative, facilitating joint ventures between Indian companies and global OEMs, and aggregating demand from government agencies and hyperscale operators to provide long-term visibility for manufacturers establishing production facilities in India.
The report indicates that as AI adoption accelerates and digital infrastructure requirements expand, the data centre sector is expected to emerge as a significant contributor to industrial investment, technology manufacturing and infrastructure development across the country.
Source - PTI
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