Overview
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India’s data center capacity expanded from roughly 375 MW in 2020 to approximately 1,575 MW in 2026, with listed companies participating through various business models.
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Operators like Airtel, Reliance, and TCS generate recurring revenue, whereas construction firms and cooling specialists such as L&T and Blue Star collect payments upon project delivery.
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Order growth does not automatically translate to higher profits, and an upcoming data center policy may alter approval processes, expenses, and investment timelines.
India’s data center capacity has multiplied by more than four times over a six-year span. Official government data indicates an increase from approximately 375 MW in 2020 to around 1,575 MW in 2026, prompting investors to identify which publicly traded companies are profiting from the trend.
Every data center requires secured land, reliable electricity, and advanced cooling systems before a single server becomes operational. Capital flows to operators, construction firms, and cooling experts, with each category carrying distinct risk profiles.
Direct Operators: Recurring Income From Capacity
Bharti Airtel operates its dedicated data center subsidiary, Nxtra. In March 2026, Nxtra disclosed a USD 1 billion funding initiative, with Alpha Wave Global, Carlyle, and Anchorage Capital contributing USD 710 million.
Airtel will provide the remaining USD 290 million. Upon transaction closure, the deal values Nxtra at roughly USD 3.1 billion, pending regulatory clearances while Airtel maintains majority control. Nxtra also assists in constructing Google’s Visakhapatnam AI facility alongside AdaniConneX. This hub falls under Google’s broader USD 15 billion investment commitment for India, utilizing Google’s capital rather than Nxtra’s.
Reliance Industries is currently developing a gigawatt-scale site in Jamnagar, Gujarat, where construction is underway. Morgan Stanley projected in late 2025 that Reliance could allocate USD 12 billion to USD 15 billion toward AI infrastructure at the location, assuming the conglomerate utilizes a quarter of the capacity while leasing out the rest. This remains an analyst projection rather than a formal corporate commitment.
Developments in Andhra Pradesh introduce additional layers. In November 2025, Reliance entered into a memorandum of understanding (MoU) with the state government for a 1 GW AI data center. Later that month, Digital Connexion revealed an USD 11 billion initiative for a 1 GW campus in Visakhapatnam.
Digital Connexion operates as a joint venture involving Reliance, Brookfield, and Digital Realty. Public disclosures remain unclear as to whether these twin announcements refer to the same project or separate ones. Furthermore, because Reliance represents only one of three partners, the USD 11 billion figure does not belong solely to Reliance, and an MoU functions merely as an early-stage milestone rather than a finalized construction plan.
TCS entered the space via HyperVault, which secured 264 acres in Hyderabad to establish a campus capable of hosting up to 1 GW. HyperVault and its collaborators anticipate total investments reaching up to Rs. 70,000 crore, with construction scheduled in phases aligned with customer demand. Both the 1 GW capacity target and the Rs. 70,000 crore expenditure represent full build-out maximums rather than current operational metrics.
Builders and Cooling: Project Revenue, Not Rent
Infrastructure builders and equipment vendors primarily secure revenue during the active construction phase of a project.
Larsen & Toubro was identified as a contractor for 310 MW worth of projects in Hyderabad. Its record order book of Rs. 7.79 lakh crore spans all its business segments and does not isolate data center contracts.
As microprocessors generate higher operating temperatures, thermal management becomes increasingly critical. Blue Star generated approximately Rs. 1,000 crore from mechanical, electrical, and plumbing (MEP) work related to data centers during the 2026 fiscal year.
During its August 2026 earnings briefing, leadership projected MEP revenues from data centers to reach between Rs. 1,350 crore and Rs. 1,400 crore for fiscal year 2027, with a target of roughly Rs. 4,000 crore by fiscal year 2029—accounting for nearly 20 percent of total company revenue.
Executives also noted that Blue Star captures roughly 30 percent of the market for data center MEP projects, whereas its market share for data center chillers sits at 10 to 12 percent, representing two distinct commercial segments. Both projections stem from data compiled in the June 2026 quarter.
Voltas is positioned at an earlier stage in this sector. According to a research note published by PL Research in September 2026, Voltas has established a specialized data center division and secured approximately Rs. 200 crore in orders, representing a modest foundation relative to its primary air-conditioning operations.
Revenue Growth Is Not Shareholder Returns
Blue Star illustrates the operational disconnect. Although its data center order intake hit roughly Rs. 1,500 crore between April and June 2026, its operating margin contracted from 6.7 percent to 5.2 percent, while pre-tax profit prior to exceptional items declined by approximately 24 percent.
The data center division did not drive this downturn; financial analysts point instead to the air-conditioning products segment. Management elected to protect market share amidst climbing commodity and currency expenses, preventing the firm from successfully transferring those higher costs to end consumers.
Consequently, PL Research lowered its price target and downgraded the equity, while Motilal Oswal values the stock at approximately 54 times its projected earnings for fiscal year 2027. Gigawatt-scale campuses follow a similar dynamic, offering extensive top-line revenue potential while demanding substantial upfront capital prior to generating positive returns.
What Could Go Wrong, and a Policy to Watch
Three primary evaluations help scrutinize these ventures: Are announced plans successfully converting into legally binding contracts and physical construction? Can corporations complete builds without cost overruns eroding profit margins? Do current equity valuations already price in multi-year hypergrowth?
On October 14, 2026, Minister of State for IT Jitin Prasada announced that the federal government is formulating a specialized data center policy designed to prevent escalating power consumption from data facilities from driving up residential electricity tariffs, though he offered no specific details or implementation timeline.
The announcement followed local protests by residents in Mumbai and Visakhapatnam opposing planned Amazon and Google infrastructure sites due to environmental concerns over water resources, power availability, and noise pollution. Final regulatory guidelines could alter approval procedures, operational expenses, and the deployment speed of upcoming investments.
Also Read: Google’s USD 15 Billion India Data Center: Why Water, Wildlife Concerns are Growing
What This Means Going Forward
The rapid scaling of India’s data center ecosystem presents commercial opportunities for operators, construction firms, and cooling equipment providers. Ultimate financial returns will hinge upon operational execution, sustained end-user demand, and the valuations investors pay for anticipated growth. Key developments to monitor include upcoming policy specifics and the conversion rate of MoUs into physical construction.
Also Read: Data Center Careers to Look for in India: Jobs Beyond Software and IT Roles
Final Thought
Succeeding in the next phase of India’s AI infrastructure rollout may rely less on promotional announcements regarding massive campus sizes and more on securing reliable, fairly priced electricity and water access. Regulatory frameworks, community acceptance, and power grid connectivity will dictate the market pace, favoring firms that proactively account for these constraints.
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FAQs
1. How fast has India’s data center capacity grown?
Official government metrics indicate that capacity climbed from roughly 375 MW in 2020 to approximately 1,575 MW in 2026, marking more than a fourfold expansion over a six-year period.
2. How do operators, builders and cooling firms earn differently?
Operators such as Bharti Airtel’s Nxtra collect recurring income derived from managing and leasing operational capacity. Conversely, construction contractors like Larsen & Toubro and cooling specialists such as Blue Star earn revenue primarily during the construction phase of a project, with each business model carrying distinct risk exposures.
3. Do more data center orders mean higher profit for Blue Star?
Not necessarily. Although Blue Star secured about Rs. 1,500 crore in data center contracts between April and June 2026, its operating margin contracted from 6.7 percent to 5.2 percent. Financial analysts attribute this margin squeeze to the air-conditioning product division, where rising input costs could not be successfully passed along to customers.
4. Are Reliance’s Andhra Pradesh MoU and the Digital Connexion campus the same project?
Public reporting does not explicitly confirm this. Reliance signed an MoU for a 1 GW AI data center in November 2025, and later that month Digital Connexion disclosed an $11 billion proposal for a 1 GW campus in Visakhapatnam. Because Reliance shares ownership as one of three partners in the venture, the $11 billion figure is not exclusive to Reliance.
5. What is the planned data center policy, and why does it matter?
On October 14, 2026, junior IT minister Jitin Prasada announced that the government is drafting a dedicated regulatory framework intended to shield regular consumers from electricity price spikes driven by data center power demands. While no specifics or timelines have been provided, the finalized regulations could reshape project approvals, operational costs, and the velocity of future investments.
