Hyderabad Emerges as India’s Next Big AI Infrastructure Destination
HYDERABAD: Hyderabad has strengthened its position as one of India’s fastest-growing data centre markets. According to Knight Frank India’s India Data Centre Market Update 2025, the city’s live IT capacity more than doubled from 60.9 MW in 2022 to 151.4 MW by the end of 2025.
The report said Hyderabad has a committed and early-stage development pipeline of 1.9 GW. This is second only to Mumbai. The growth is being driven by rising demand for hyperscale facilities, AI workloads and large digital infrastructure projects.
Meanwhile, Mumbai remains the country’s largest data centre market. It had a committed pipeline of 1,543.3 MW by the fourth quarter of 2025. In addition, its early-stage pipeline exceeded 2,209 MW. The city also had 173 MW under construction, taking its planned capacity to nearly 3.9 GW.
According to Knight Frank, Hyderabad’s growth is being supported by large campus-style developments. The city also offers lower costs compared with many coastal markets.
Telangana policies boost AI-focused investments
The report highlighted the Telangana government’s efforts to position Hyderabad as a global AI data centre hub. The state has introduced incentives for high-density GPUs, large AI training facilities and liquid-cooling technologies. In addition, projects such as Future City and AI City have increased the city’s appeal for next-generation digital infrastructure.
Furthermore, Hyderabad’s relatively safe geography has become an important factor for investors when selecting sites.
Major operators, including NTT and AdaniConneX, are expanding their presence in the city. At the same time, global hyperscalers continue to increase investments.
Microsoft is expected to launch its India South Central data centre region in Hyderabad in 2026. Meanwhile, Amazon Web Services (AWS) already operates three availability zones in the city. These account for 46% of Hyderabad’s live IT capacity.
Oracle currently offers cloud services in Hyderabad through a colocation-based setup. However, the company has announced plans to establish its own data centre in the city to expand its capacity in India.
Demand shifts towards hyperscale-led growth
The report noted that Hyderabad recorded data centre take-up of 19.2 MW in 2024. This reflected a growing preference for hyperscale demand. Although absorption slowed in 2025, average vacancy levels remained at 23%. As a result, the market is still in a build-out phase ahead of expected AI-driven demand.
Viral Desai, international partner and senior executive director at Knight Frank India, said India’s data centre growth is increasingly marked by regional specialisation.
“While Mumbai continues to lead hyperscale deployments because of its connectivity advantages, Hyderabad is emerging as a preferred AI infrastructure destination. At the same time, Chennai is strengthening its role as a gateway for international data traffic from the east,” he said.
Desai also said that Visakhapatnam has emerged as one of India’s most active greenfield data centre markets. The city is attracting large-scale proposals backed by government support, available land and planned subsea cable connectivity.
Nationally, live IT capacity across India’s seven major data centre markets crossed 1.6 GW by the end of 2025. The country added 371.5 MW of live capacity in 2025 after adding 361.6 MW in 2024. This shows continued growth supported by a strong project pipeline.
Shishir Baijal, chairman and managing director of Knight Frank India, said the sector is undergoing a major transformation.
“AI workloads, hyperscaler investments, data localisation requirements and cloud adoption are accelerating demand for high-density digital infrastructure across India. What sets the current growth cycle apart is the size of the development pipeline and the expansion into new markets beyond traditional hubs,” Baijal said.
