India's Generative AI sector is poised for rapid growth over the next five years, driving an increased demand for data centres, according to a report by ANAROCK.

The market size of Gen AI in India is projected to rise from USD 1.1 billion in 2025 to USD 6.4 billion by 2030, expanding at a compound annual growth rate of 42 per cent.

The surge will require advanced infrastructure, with data centres playing a key role in managing computing power, storage, and data processing needs.

As AI-driven applications become more sophisticated, data centre operators are adapting their strategies to accommodate rising infrastructure demands.

The push for real-time AI applications will also drive the need for edge data centres, particularly in Tier-II cities like Jaipur, Ahmedabad, and Visakhapatnam, bringing computing closer to users and improving efficiency.

With the expansion of India's data centre industry, there is a growing focus on sustainability and energy efficiency. Operators are increasingly relying on renewable energy sources and adopting energy-efficient solutions to meet rising power demands while aligning with India's sustainability goals.

Over the past decade, the sector has attracted over USD 6.5 billion in investments, benefiting from infrastructure status that facilitates easier project financing.

With continued interest from global investors, India's data centre industry is set for exponential growth, playing a crucial role in the country's digital transformation.