Hyderabad Emerges As India’s Next AI Infrastructure Hub
Hyderabad is rapidly emerging as one of India’s most important destinations for artificial intelligence and digital infrastructure investments, with data centre capacity expanding at one of the fastest rates in the country. New industry data indicates that the city is positioning itself as a major hub for AI computing, cloud services and hyperscale digital infrastructure.
According to Knight Frank India’s India Data Centre Market Update 2025, Hyderabad’s live IT capacity more than doubled from 60.9 MW in 2022 to 151.4 MW by the end of 2025. The city also holds a committed and early-stage development pipeline of nearly 1.9 GW, making it the second-largest growth market after Mumbai. The expansion reflects growing demand for hyperscale facilities, cloud computing infrastructure and AI-driven workloads that require high-performance computing environments. Industry analysts note that AI adoption is significantly increasing demand for advanced data processing, storage and networking capabilities across major technology markets. Hyderabad’s growth is being supported by a combination of policy support, competitive operating costs and large-scale digital infrastructure projects. Initiatives such as Future City and AI City are helping position the city as a strategic destination for next-generation technology investments.
State policies encouraging AI-focused infrastructure, including support for high-density GPU deployments, AI training facilities and advanced cooling technologies, have further strengthened investor interest. The city’s relatively stable geography and expanding energy infrastructure also make it attractive for large-scale data centre development. Major global operators continue to expand their footprint in Hyderabad. Companies including NTT and AdaniConneX are increasing investments, while global cloud providers are strengthening regional capacity. Microsoft is expected to launch its India South Central data centre region in Hyderabad in 2026, while AWS already operates multiple availability zones that account for a significant share of the city’s existing capacity.
Urban economists highlight that data centre investments generate economic benefits beyond the technology sector. Large facilities support demand for construction, engineering services, power infrastructure, telecommunications networks and highly skilled technical talent, creating broader economic opportunities across urban regions. The report also indicates that Hyderabad is increasingly becoming a preferred destination for AI infrastructure development as businesses accelerate digital transformation and cloud adoption. Despite continued expansion, the market remains in a growth phase with substantial capacity planned to meet future demand. As India’s digital economy continues to scale, Hyderabad’s expanding data centre ecosystem is expected to strengthen the city’s role as a national technology powerhouse. The next phase of growth will depend on continued investments in energy infrastructure, sustainability measures and advanced digital capabilities to support long-term AI and cloud computing demand.
