India is poised to become a major global hub for AI data center development due to its expanding digital economy and significant data production. However, its current data center capacity is only 3% of the world's total, indicating a large unmet demand. AI workloads require high power and advanced cooling. Key factors for optimal state selection include surplus and reliable electricity (Gujarat, Maharashtra, Rajasthan, Tamil Nadu), renewable energy availability and policies (Rajasthan, Gujarat, Tamil Nadu, Karnataka, Maharashtra), land availability and cost (Maharashtra, Gujarat, Rajasthan, Tamil Nadu), existing data center infrastructure (concentrated in Mumbai, Chennai, Bengaluru, Hyderabad, Delhi-NCR), state-specific incentives (Rajasthan's policy is AI-focused), and the presence of AI industries and skilled workforce (Karnataka and Tamil Nadu lead). This presents significant opportunities for startups in energy-efficient cooling, sustainable practices, AI-driven management, specialized AI data centers, and connectivity solutions. States that strategically address these factors will be the prime destinations for India's AI data center growth.