Morgan Stanley: India Industrials & Utilities: Data Centers: Sizing and Mapping the Opportunity
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Morgan Stanley projects that India's data center capacity will increase dramatically from the current 1.8 gigawatts to 10.5 gigawatts by fiscal year 2031, driven by hyperscalers, AI workloads, and data localization regulations. AI data centers will account for roughly 75% of this capacity addition, reaching 6.8 gigawatts. This massive expansion creates an estimated $80 billion total addressable market opportunity for industrials and utilities combined.
For the industrial sector, the opportunity is approximately $60 billion, based on a capital expenditure assumption of $7 million per megawatt, excluding GPUs and servers. This industrial opportunity is primarily driven by power systems at $20 billion, including transformers, switchgears, and UPS systems. Cooling and MEP represent $14 billion, benefiting from a shift toward liquid cooling which offers a superior PUE of roughly 1.2 compared to 1.4-1.5 for air cooling. Passive IT infrastructure and land or civil works account for $10 billion and $14 billion, respectively.
The utility sector opportunity stands at roughly $20.3 billion, reflecting the massive power demands of data centers. Morgan Stanley estimates this will require 7.5 gigawatts of thermal power, 13.9 gigawatts of renewable energy, and 11.7 gigawatt-hours of battery storage capacity between fiscal years 2027 and 2031. Renewable energy's share of data center power supply is expected to rise progressively from 25% in fiscal year 2027 to 35% by fiscal year 2031. The firm expects data centers to consume 75 terawatt-hours of electricity by fiscal year 2031, equating to 3% of India's total power demand.