Why India’s data centre boom must prioritise white and grey-space efficiency

As India accelerates into its digital future with AI innovation, data localization, and sovereign cloud policies fuelling the explosion in data center infrastructure requires more than just capacity. At the heart of sustainable scalability lies the nuanced balance between white space (where IT equipment resides) and grey space (cooling, power, cabling, and support infrastructure). Optimizing both is no longer a facility-level concern’s a strategic imperative determining cost, carbon, and continuity.

The India data center cooling market is estimated at USD 2.38 billion in 2025, projected to grow to USD 7.68 billion by 2030, at a CAGR of ~26.4%. While air-based systems still lead, liquid cooling is the fastest-growing segment, owing to hyperscale demand and tighter carbon regulations. Notably, hyperscale players command over 40% of the market share and are fuelling innovations like immersion and rear-door heat exchangers.

Volume meets sustainability

India’s data center capacity is projected to rise nearly fivefold from around 870 MW today to 4,500 MW by 2030. This rapid scale-up comes amid soaring rack densities surging from 10 kW to 30 kW or more to support AI workloads. The result? Grey spaces risk ballooning if not carefully engineered for thermal and power efficiency. Meanwhile, India's major tech hubs Bengaluru, Mumbai, Delhi, and Chennai are grappling with acute water stress; Bengaluru data centers alone consume ~140 million litres per day, enough for nearly 42,000 households.

While grey-space optimization needs to take centre stage now in sustainability discussions, white-space efficiency is equally pivotal. Smarter rack design, dynamic load balancing, optimised cooling,  and aisle containment can significantly improve overall facility utilization.  As AI workloads push rack densities higher, synchronizing white-space planning with cooling and power design ensures that every square metre contributes to performance without inflating energy use.

State leadership: Blueprint for efficiency

It’s encouraging to see individual states stepping ahead of policy inertia to tackle infrastructure design with purpose. Madhya Pradesh, for instance, has taken a bold stance, signing a Memorandum of Understanding with Spain-based Submer Technologies to co-develop up to 1 GW of AI-ready, liquid-cooled data centers. This isn’t just lip service: projections point to up to 45% energy savings and 90% water conservation compared to legacy systems, backed by state support through land allocation, regulatory fast-tracks, and workforce skilling.

In contrast, Rajasthan offers a more comprehensive strategy, with its data center Policy-2025 setting the tone for infrastructure that is both investment-friendly and sustainability-driven. Incentives extend from capital subsidies and power tariff concessions to green-tech reimbursements and flexible land regulations, aligning economic growth with ecological responsibility. This policy isn’t just about buildings; it’s about designing a data center ecosystem.

What we need next are policies that explicitly measure grey-space efficiency, whether through sustainability KPIs or innovation incentives, and encourage modular, resource-efficient infrastructure as the new norm.

Need for local innovation: Thermal sovereignty

From my perspective, India’s ambition to shift from simply hosting digital services to becoming a true innovator in the data infrastructure space hinges on local thermal innovation. Greyhound Research captures this shift precisely, calling India’s emergence of domestic coolant distribution units (CDUs) for direct-to-chip liquid cooling “a defining moment in India’s transition from data center host to technology co-creator.” More than just hardware, locally developed solutions offer sovereignty over supply chains, faster deployment cycles, and tailored performance for India’s unique climatic and regulatory conditions, essentials for scaling high-density AI workloads effectively.

The path to truly scalable and sustainable data center growth in India rests on four strategic pillars:

First, we must incentivize grey-space efficiency. States should not just dangle generic subsidies; they should actively prioritize advanced cooling technologies like immersion or direct-to-chip liquid cooling, as well as modular power systems. When Madhya Pradesh fast-tracks land, approvals, and investment for AI-ready infrastructure, it’s not just policy; it’s a signal that green investments are valued.

Second, we must champion indigenous innovation. The government's draft 2020 Data Centre Policy rightly proposes benefits for domestic manufacturing and R&D, creating an ecosystem where local solutions fully adapted to India’s climate and regulatory fabric can thrive.

Third, sustainability must go beyond aspirational talk. We urgently need mandatory metrics embedded within certification frameworks, particularly Power Usage Effectiveness (PUE), Water Usage Effectiveness (WUE), and modular deployability standards. The Centre’s move toward India-specific data center certification is a step in the right direction, but it must solidify these benchmarks to ensure real environmental accountability. Green frameworks like the IGBC rating system can also help govern energy and water efficiency in a structured manner.

Finally, we should actively share and replicate successful models across states. Madhya Pradesh’s and Rajasthan’s efforts, demonstrating how policy design can align modernization with environmental and innovation outcomes, deserve to be playbooks, not exceptions.

India’s data infrastructure is not just about raw capacity’s about building smart, sustainable, and resilient systems. By optimizing the invisible yet critical grey space through technology, policy, and local innovation, India can ensure every megawatt added serves digital ambitions responsibly. At its core, optimizing grey space is not just a matter of technical upgrade; it’s a strategic imperative. It safeguards our environmental commitments, mitigates operational risk, reduces costs, and accelerates deployment of mission-critical infrastructure.

India now stands at a decision point: continue building data centres that scale but strain, or build them to serve efficiently, sustainably, and equitably.
 

Sanjay Motwani

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Sanjay Motwani is Vice President — APAC and Business Head - Legrand Data Center Solutions, India.