AI wave accelerates data centre expansion at scale

India is set for rapid growth in the data centre market, driven by rising artificial intelligence (AI) demand, favourable demographics and its strategic location near the Middle East, according to a Goldman Sachs Research report.

  The report identified India, Japan and the Philippines as the key growth markets for data centres in Asia. While Japan’s expansion is being supported by strong government initiatives and the Philippines benefits from easing regulations, India stands out due to its structural advantages and deep engineering talent pool.

 Goldman Sachs said the outlook for Asia’s data centre sector remains highly positive, with demand expected to grow sharply in the coming years. 

 Growth is being fuelled not only by traditional cloud computing workloads but also by rising demand for GPUs and AI-focused infrastructure.The report noted that AI-related demand is expanding the overall market rather than merely shifting existing capacity. This is leading to fresh investments and faster infrastructure development across the region. However, the report also flagged major infrastructure challenges, particularly power availability, as a key bottleneck for data centre expansion. Limited grid capacity is affecting construction timelines and delivery capabilities across Asian markets.To overcome resource constraints, operators are adopting localised solutions. 

 In Mumbai, for instance, data centres are using treated wastewater from purification plants instead of potable water sources, helping address water scarcity while maintaining efficient power usage.

 Goldman Sachs also highlighted that AI is changing customer requirements and project timelines. Single-tenant AI clients are placing orders well before construction begins to secure customised facility designs, unlike traditional multi-tenant customers that typically require shorter lead times.

 Despite rising compliance requirements and geopolitical uncertainties, the report said strong AI adoption and digital transformation continue to support robust demand for data centre capacity across India and the broader Asian region.

—ANI