Mumbai with 35 operators is the leading destination for establishing a data centre, followed by Bengaluru with 27 and Delhi-NCR with 19, a report said on Tuesday.
Tech growth, Smart City initiatives and easy availability of land and infrastructure has emerged as strong demand drivers for opening data centres in India, said the report by Los Angeles-based CBRE Group, one of the world's largest commercial real estate services and investment firm.
According to CBRE South Asia Pvt Ltd, Mumbai has led the data Centre business as it is one of the global cable landing locations in the country.
Cable landing stations or submarine cables are vital international telecommunication links between countries across the world, making them an essential element in telecommunication services including broadband connectivity.
Mumbai presently has four of the 10 cable landing stations in the country.
"Overall, the data centre market outlook looks positive on the back of the availability of land and skilled talent pool along with a huge, untapped market. Moreover, a slew of policy reforms undertaken by the Indian government have generated enthusiasm among overseas investors," said Anshuman Magazine, Chairman, India and South-East Asia, CBRE.
Maharashtra and Telangana are among the quickest states to tap into the growing demand for data centres by announcing several incentive schemes for the sector.
Jharkhand and Chhattisgarh too have formulated policies for the IT-ITeS segment as well as introduced a single-window clearance system to encourage investors.
Despite having immense potential to become a data centre hub in the APAC region, the report also identified several hurdles in this path.
"Several states in India are yet to formulate policies for this segment. Additionally, issues such as a cumbersome approval process for the acquisition of infrastructure and prolonged environmental clearances also need to be addressed," said the report.
