Synopsis: Tier-2 cities in Karnataka are emerging as data centre hubs and global capability centres. These smaller cities are developing policies to attract investments. These cities beyond Bengaluru could become specialised tech corridors, leveraging logistics, ports, and airports to attract global players.
The Centre thinks that the smaller cities in Karnataka are in a good position to get funded for new data centres because people want more digital infrastructure. The Finance Minister, Nirmala Sitharaman is her latest statement talked about Tumakuru and Mangaluru as important places for data centres saying they have better roads, are connected to other places and have a lot of land that is not being used which is not the case in Bengaluru, Karnataka’s smaller cities like these are going to be important for data centres in the future.
4 Tier-2 Karnataka Cities Emerging as Data Centre Hubs
1. Mysuru
Mysuru is becoming a key Tier-2 data centre in Karnataka, the state wants to build parks for data centres in Bengaluru, Mysuru and Mangaluru that can handle power of up to 1,000 MW.The cost of land is low, the power supply is good, it has fibre connectivity and lastly it is close to Bengaluru.
Big technology companies like Infosys, Wipro, Tech Mahindra and Hexaware already have offices in Mysuru. Some important groups like ASSOCHAM and PwC think Mysuru is a major place for data centres, because Karnataka is working to improve its infrastructure beyond just Bengaluru, Mysuru data centres are getting a lot of attention.
2. Mangaluru
Mangaluru is turning out to be a big place for data centres in India because it is near the coast, has a lot of water and the power supply is good. It is also easy to connect to countries from here. The city is part of a bigger plan to build a sustainable data centre park in Karnataka, which will use 1,000 MW of power; they have already found around 350 acres of land to build on in the future.
A study done by KDEM, Deloitte and the Silicon Beach Programme found that Mangaluru is the best place to build a data centre near the coast in India because the cost of land and power is lower than in cities like Mumbai and Chennai. The city is also getting investment from companies like Datasamudra, which is planning to build a big data centre that uses artificial intelligence. This data centre will use 35-40 MW of power and will invest ₹300-500 crore.
Mangaluru has a lot of things going for it like technology parks, a port and the government is helping to improve the digital infrastructure. This is why many people think Mangaluru could be an important place, for big data centres that use a lot of power and for companies that work with artificial intelligence and cloud computing.
Also read: How ChatGPT, Gemini and AI Agents Are Fueling India’s Data Centre Boom – A Detailed Analysis
3. Hubballi-Dharwad
Hubballi-Dharwad is becoming a place for digital infrastructure in North Karnataka, this is because of its location, strong industries and growing technology presence.
Hubballi-Dharwad has many benefits, the land is not too expensive, the power supply is good and there are trains and highways. Hubballi-Dharwad has its own airport, all these things make it a great place for edge data centres and cloud infrastructure. Karnataka is spending ₹1,000 crore on innovation clusters in cities, including Hubballi-Dharwad, this will help with artificial intelligence, technology and digital infrastructure.
Hubballi-Dharwad already has some investments, for example it has the Infosys Development Centre, it also has some railway research facilities. The city is in a strategic spot to help many industries, such as manufacturing, logistics and healthcare. It can also help with 5G services in North Karnataka and nearby states. As more people want distributed cloud and edge computing infrastructure Hubballi-Dharwad can become a regional data centre hub.
4. Tumakuru
Tumakuru will be a major destination for future data centre investments in Karnataka because Tumakuru is located near Bengaluru and it has a lot of land. It has good infrastructure for industries and it is located on the Bengaluru-Mumbai Industrial Corridor and has a big industrial area that covers about 8,500 acres of land. Tumakuru also has Karnataka’s National Investment and Manufacturing Zone which’s around 13,000 acres, which is one of the biggest industrial hubs of the state. The district has already got a lot of investments, including projects for making electronics. It is also cheaper to buy land and operate in Tumakuru compared to Bengaluru.
Karnataka is investing in technology areas in smaller cities and the data centre industry in India is expected to get around USD 10-12 billion in investments by 2030. So Tumakuru would be the major place for big data centres that support artificial intelligence, cloud computing, financial technology, manufacturing and storing data for companies. This makes Tumakuru a key part of Karnataka’s plan to have a digital infrastructure beyond Bengaluru.
Future Outlook
- The India data centre industry is going to see a lot of growth by 2030 the total installed capacity of the India data centre industry is expected to increase from 1,263 MW in 2025 to around 4,500 MW. This is because businesses are generating and storing more data.
- As the demand for the India data centre industry rises the real estate footprint of the India data centre industry could expand from 16 million sq. Ft. To around 55 million sq. Ft. By 2030. This will create opportunities for developers, infrastructure providers and local economies of the India data centre industry.
- The India data centre industry is expected to attract USD 20–25 billion in investments by 2030. This shows that people are becoming more confident in the India digital infrastructure story of the India data centre industry.
- Technologies like artificial intelligence, cloud computing, machine learning, digital payments, fintech and Global Capability Centres are expected to drive the next wave of the India data centre demand across the country.
- The future growth of the India data centre industry is likely to be led by large-scale facilities. Data centres above 50 MW are expected to account for 63% of India’s total capacity by 2030. This is because there is increasing demand from hyperscalers and technology companies for the India data centre industry.
- Growth of the India data centre industry is also expected to spread beyond metros. The data centre capacity in emerging Tier-2 and Tier-3 cities is projected to reach 300–400 MW over the five to six years. This will create digital infrastructure hubs across the India data centre industry.
- The rollout of 5G networks, edge computing and time digital services is expected to accelerate the expansion of edge data centres of the India data centre industry. These edge data centres are forecast to grow at a 35–40% CAGR through 2030.
- Sustainability is becoming more important for the India data centre industry. The certified data centre capacity is expected to reach 1,500–2,000 MW by 2030. The green penetration could rise from 25% to 30–40% for the India data centre industry.
- For Karnataka cities such as Mysuru, Mangaluru, Hubballi-Dharwad and Tumakuru could be among the beneficiaries of the India data centre industry. This is because companies are looking beyond Bengaluru for land, power, connectivity and long-term expansion opportunities, for the India data centre industry.
Written by Shreya Tiwari
