HYDERABAD, September 25: Telangana has set an ambitious target of reaching 5 GW of hyperscale data-centre capacity by 2029, as the state seeks to strengthen Hyderabad’s position as a major hub for artificial intelligence, cloud computing and digital infrastructure. The target was announced by Telangana IT and Industries Minister D. Sridhar Babu during the inauguration of Microsoft’s new India South Central data-centre region.
The state currently has around 300 MW of data-centre capacity operational, while another 2 GW is under development. The government estimates that the broader AI and digital infrastructure expansion could attract approximately $30 billion in investment.
Microsoft’s newly opened India South Central cloud region in Telangana is the company’s fourth cloud region in India. The facility uses a three-zone architecture and is designed to support cloud services and AI workloads for customers in India and the wider region.
The expansion is being driven increasingly by demand for AI-scale computing, high-density GPUs and hyperscale cloud infrastructure, rather than conventional enterprise data centres. Major companies including Microsoft, AWS, Iron Mountain, CtrlS, Sify, TCL, NTT DATA and CapitaLand are among the operators and investors associated with Telangana’s growing data-centre ecosystem.
The state is also pursuing larger dedicated infrastructure projects. A longer-term plan includes developing a 1,500-acre data-centre city at Aloor on the outskirts of Hyderabad. Separately, TCS subsidiary HyperVault has secured land in Hyderabad’s Future City for a proposed 1 GW AI data-centre campus, according to reports.
Water and power consumption remain important considerations as data-centre infrastructure expands. Microsoft said its new Hyderabad region uses effectively zero water for cooling and that it is working with local partners on groundwater recharge, rainwater harvesting and watershed resilience. Its Elikatta groundwater-recharge programme had added around 5 million litres of recharge capacity by June 2026, according to the company.
The Telangana government says the data-centre expansion will complement the state’s wider AI ecosystem, including technology infrastructure, talent development and global capability centres. The initiative is expected to support growing demand for computing capacity as businesses increasingly adopt cloud services and artificial intelligence.
With the 5 GW target, Hyderabad and the surrounding Telangana region are positioning themselves for a major expansion of digital infrastructure over the next three years, with investments expected across data centres, AI computing, cloud services and related technology ecosystems.