India's Green Data Center Expansion and Its Impact on Tech Infrastructure Stocks

India's digital infrastructure is undergoing a seismic shift as the government and private sector align to prioritize green data centers. With data consumption in the country surging past global averages and the Data Protection Act of 2023 mandating local data storage, the demand for energy-efficient, sustainable data centers is accelerating. This transformation is not just reshaping India's tech landscape but also redefining investment opportunities in tech infrastructure stocks. Strategic capital allocation-driven by policy incentives, renewable energy integration, and private-sector innovation-is at the heart of this boom.

Government Policies: Catalyzing Green Growth

The Indian government has emerged as a pivotal enabler of this transition. The draft National Data Center Policy 2025, circulated by the Ministry of Electronics and Information Technology (MEITy), offers a conditional 20-year tax holiday for operators who meet targets for capacity expansion, energy efficiency, and job creation. Additionally, input tax credits on GST for capital assets like HVAC systems and electrical equipment are designed to reduce upfront costs. These incentives are complemented by state-level initiatives, such as Maharashtra's Green Integrated Data Center Parks, which aim to build 1.5GW of IT capacity powered entirely by renewable energy. The state's $20 billion investment plan underscores its ambition to lead India's green data center revolution.

By 2030, green-certified data center capacity is projected to account for 30–40% of the total, up from 25% currently, with Mumbai and Chennai hosting nearly three-fourths of the existing 314 MW of green-certified capacity, according to a Financial Express projection. These policies are not just environmental imperatives but economic ones, as they position India to capture a larger share of the global data center market while aligning with its 2070 carbon neutrality goals.

Capital Allocation: Financing the Green Transition

The capital-intensive nature of data center development requires innovative financing strategies. Industry leaders are advocating for affordable financing and renewable energy subsidies to bridge the gap between ambition and execution. For instance, a 100% waiver of wheeling and banking charges for renewable energy usage over ten years is being proposed to incentivize solar and wind adoption, as noted in a BusinessWorld report. This is critical given that green data centers require significant investments in energy-efficient cooling technologies, server virtualization, and grid connectivity.

The India Green Data Center Market, valued at USD 1,623.11 million in 2024, is projected to grow at a compound annual growth rate (CAGR) of 21.38% to reach USD 7,645.97 million by 2032, Credence Research reports. This growth is underpinned by a $20–25 billion investment pipeline over the next five to six years, with urban hubs like Bengaluru, Hyderabad, and Mumbai leading the charge. Maharashtra alone is expected to account for 35% of upcoming power capacity, reflecting the state's strategic focus on attracting global tech firms, according to a GlobeNewswire database.

Strategic Players: From Anant Raj to Tata Communications

Private-sector players are capitalizing on this momentum. Anant Raj, for example, plans to expand its data center capacity to 300 MW, leveraging its expertise in scalable, energy-efficient infrastructure. Similarly, Tata Communications and RailTel Corporation of India are leveraging existing assets and partnerships to offer high-availability solutions, solidifying their positions as key players, according to an InvestIndian analysis.

The rise of green data centers also benefits firms in the energy and real estate sectors. Companies providing renewable energy solutions, such as Yotta Infrastructure (which operates a 10 MW solar-powered data center in Navi Mumbai), are seeing heightened demand for their services, ESG News reports. Meanwhile, real estate developers are reaping rewards from the construction of dedicated data center parks, which require vast land parcels and infrastructure upgrades.

Investment Implications: A Win-Win for Long-Term Investors

For investors, the confluence of policy support, capital inflows, and sustainability trends makes India's green data center sector a compelling opportunity. The sector's alignment with global ESG (Environmental, Social, and Governance) standards ensures institutional and private capital flows, while the government's Climate Finance Taxonomy-a framework to standardize sustainable investments-adds credibility to these projects, as noted in a KPMG blog.

However, challenges remain. Streamlined approvals, assured clean power access, and harmonized regulations are critical to sustaining this growth. As CtrlS Datacenters and other industry leaders emphasize in BusinessWorld, the success of these initiatives hinges on continued government-industry collaboration.

Conclusion

India's green data center expansion is more than a tech infrastructure play-it's a strategic bet on the future of sustainable digitalization. By prioritizing capital allocation toward renewable energy, tax incentives, and scalable infrastructure, the country is positioning itself as a global leader in the green data center race. For investors, the sector offers a unique blend of growth potential and environmental impact, making tech infrastructure stocks a cornerstone of a forward-looking portfolio.