India's data centre capacity is projected to expand significantly from 1.8 GW to approximately 10.5 GW by FY2031, according to a report by Morgan Stanley. This surge is largely attributed to the increasing demand for artificial intelligence (AI) and data localisation policies, with AI workloads expected to contribute around 6.8 GW to this growth. The report highlights a projected $60 billion investment in infrastructure, focusing on land, power systems, cooling infrastructure, and networking equipment. To support these energy-intensive facilities, over $20 billion will be needed for the power ecosystem, with a shift towards renewable energy sources. Additionally, policy measures such as data localisation and fiscal incentives are fostering capital formation and attracting global technology firms to India. However, the report also mentions challenges, including access to reliable power and reliance on imported high-end computing hardware. Overall, the anticipated increase in data centre capacity positions India as a regional hub for cloud and digital services, with an expected cumulative capital expenditure of $800 billion in related sectors over the next five years.