Hyderabad: Hyderabad is rapidly emerging as one of India’s most important digital infrastructure destinations, with industry reports indicating that the city is on track to become the country’s second-largest data centre hub after Mumbai. Driven by rising demand for cloud computing, artificial intelligence, digital services and enterprise technology infrastructure, Hyderabad has witnessed remarkable growth in data centre investments over the past few years.
According to Knight Frank India’s latest Data Centre Market Update 2025, Hyderabad’s operational data centre capacity has increased from 60.9 MW in 2022 to 151.4 MW by the end of 2025, representing one of the fastest growth rates among major Indian cities. The city has also built a substantial future development pipeline, positioning itself as a key destination for hyperscale operators and global technology companies.
Nearly 1.9 GW Capacity Pipeline Planned
Industry data indicates that Hyderabad currently has a committed and early-stage development pipeline of approximately 1.9 GW. Several large-scale projects are either under construction or in various stages of planning, reflecting strong investor confidence in the city’s long-term prospects.
The growth is being driven by increasing requirements for AI workloads, cloud storage, enterprise applications, digital banking platforms, e-commerce services and government digital initiatives. Hyderabad’s strategic location, availability of land, reliable power infrastructure and strong fibre connectivity have further enhanced its attractiveness for data centre operators.
How Hyderabad Compares with Other Indian Cities
| City | Operational Capacity (Approx.) | Market Position |
|---|---|---|
| Mumbai | 1,500+ MW Pipeline, Largest Existing Base | India’s Largest Data Centre Hub |
| Hyderabad | 151.4 MW Operational, 1.9 GW Pipeline | Fastest Growing Major Market |
| Chennai | Growing Rapidly | Strong International Connectivity |
| Bengaluru | Expanding Capacity | Technology and Startup Ecosystem |
| Delhi-NCR | Steady Growth | Government and Enterprise Demand |
AI Boom Driving Demand
The rise of artificial intelligence is expected to play a major role in Hyderabad’s growth. AI applications require high-density computing infrastructure, advanced cooling systems and large-scale data storage facilities. Industry observers believe the city is well-positioned to benefit from this trend due to Telangana’s efforts to attract technology investments and build a robust digital ecosystem.
The state government has also announced initiatives aimed at developing Hyderabad into a leading AI and digital infrastructure destination, complementing ongoing projects such as Future City and other technology-focused developments.
Vacancy Levels Reflect Expansion Phase
While new capacity is being added at a rapid pace, market experts note that Hyderabad is currently in a build-out phase. Vacancy levels remain relatively elevated as developers prepare for anticipated future demand from cloud providers, AI firms, financial institutions and multinational corporations.
However, industry projections suggest that increasing adoption of AI technologies, digital transformation initiatives and rising data consumption across sectors could significantly boost occupancy levels in the coming years.
Major Economic Impact Expected
Data centres are increasingly being viewed as critical infrastructure supporting India’s digital economy. Large investments in this sector create demand for power, telecommunications, construction, engineering services and skilled technology jobs.
As more operators establish facilities in Hyderabad, the city is expected to strengthen its position as a national technology hub while attracting billions of rupees in fresh investments. If current trends continue, Hyderabad could soon consolidate its position as India’s second-largest data centre market, behind only Mumbai, and emerge as one of Asia’s important digital infrastructure destinations.
