Posted by Mumbai: The rising AI adoption could drive deployment of 650,000-700,000 GPUs in AI data centres in India over the next 5 year, creating a $23 billion investment opportunity, according to Avendus Gaptial’s new Data Centres report.
The investment bank Avendus Capital in the third annual edition of its Data Centres report, revealed that the growth in AI adoption could drive deployment of upto 700,000 GPUs in India’s data centre infrastructure over the next five years. The rising AI adoption and GPU deployment in such a large number opens up a big investment opportunity of $23 billion in India. This will drive India’s data centre capacity to grow at a 26% CAGR over the next five years.
AI-led infrastructure demand, along with rising cloud and digital adoption, will nearly triple India’s built data centre capacity from 1.6 GW in 2025 to ~5 GW by 2030, the report highlighted. 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 $25 billion over the next five years, the report stated.
Mumbai will remain India’s largest data centre hub, contributing 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), according to the report.
“AI adoption is emerging as a significant catalyst for next-genetion infrastructure investments in data centers, alongside sustained demand from cloud and digital workloads,” said Vaibhav Garg, Avendus Capital’s Director of Infrastructure & Real Assets Investment Banking, and chief author of the report.
“This dual demand trajectory has already translated into $5 billion of transaction activity over the last three years, with backing from global institutional investors, infrastructure funds, and strategic operators,” added Garg.
“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 3 years,” he said.
The report also highlighted rising private market activity in the sector, with global data centre transactions currently being consummating at EBITDA multiples of 20–30x. Investors are increasingly exploring REITs and InvITs as capital recycling structures, given the sector’s long-term contracts and stable cash flow profile.
Rising enterprise adoption and investments in domestic AI capabilities, including indigenous LLMs, will drive India’s AI market from $13 billion in 2025 to $131 billion by 2032 at ~39% CAGR.
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, as per the report. This has created substantial demand for high-density, liquid-cooled, AI-ready data centre capacity across India.