India is set to become a leading growth market for data centres in Asia, propelled by strong demand from artificial intelligence workloads, a favourable demographic profile, and its strategic proximity to the Middle East, according to a Goldman Sachs Research report released on June 22, 2026.
Key Growth Drivers for India
The report identifies India, Japan, and the Philippines as the primary engines of data centre expansion in the Asian region. While Japan benefits from government-backed initiatives and the Philippines from reduced regulatory hurdles, India stands out due to its structural and geographic advantages. The report notes that India has a deep pool of engineering talent and a strategic location near the Middle East, which is expected to attract investment in data centre infrastructure.
Goldman Sachs Research emphasises that the broader outlook for data centres across Asia remains exceptionally robust, featuring a broad and steep growth curve. Traditional cloud workloads continue to expand alongside new graphics processing unit (GPU) and artificial intelligence-first demand, which increases the total market size rather than shifting existing capacity.
AI-Driven Demand Reshaping the Sector
"The outlook for data centers in Asia is exceptionally robust, characterized by a broad and steep growth curve," the report stated. "Traditional cloud workloads continue to grow alongside new GPU and AI-first demand, expanding the total market size rather than simply redistributing it."
The rise of artificial intelligence is altering customer timelines and infrastructure designs. Single-tenant AI customers are committing to orders well before construction starts to secure bespoke designs, whereas traditional multi-tenant customers expect much shorter lead times. This shift is pushing operators to adopt modular and prefabricated designs to compress delivery timelines.
"The rise of AI is fundamentally changing customer timelines and infrastructure needs," the report added. "Single-tenant AI customers are committing to orders well before construction starts to lock in bespoke designs, whereas traditional multi-tenant customers expect much shorter lead times."
Infrastructure Bottlenecks and Regional Adaptations
Despite the strong demand, regional operators face significant infrastructure bottlenecks, particularly regarding power availability, which affects construction timelines and delivery capabilities across Asia. The report notes that resolving grid infrastructure issues typically requires years or decades, making power a primary constraint. To circumvent resource limitations, operators are adopting tailored regional approaches.
For example, in Mumbai, facilities are sourcing treated wastewater from nearby purification plants rather than drawing from potable water sources, allowing them to balance water scarcity while achieving highly efficient power usage effectiveness levels.
Geopolitical and Regulatory Challenges
Geopolitics and regulatory shifts have introduced higher compliance overhead across the sector, forcing operators to extend due diligence beyond direct customers to ultimate end-users and supply chain participants. The report adds that new AI-first customers and neoclouds move at a radically different commercial speed, pushing for modular and prefabricated designs to compress delivery timelines.
Despite these operational adjustments, the underlying demand momentum for data centre capacity in the region has not been deterred. The report concludes that India, with its unique combination of demographics, talent, and geographic advantages, is well-positioned to capture a significant share of the growing Asian data centre market.
