India To See 6x Growth In Data Centre Capacity With Rs 1.6 Lakh Cr Investment
India is poised for a remarkable surge in data centre capacity, driven by an infusion of approximately Rs 1.6 lakh crore in investments over the next six years. This capital injection, coupled with a favourable regulatory environment and a burgeoning data explosion, is expected to catapult India's global data centre presence from around four per cent in 2022 to a projected 15-17 per cent by 2028, according to Icra.
The data centre landscape in India is on the cusp of a transformative growth phase, with experts at Icra forecasting a remarkable six-fold increase in data centre capacity, expanding to 5,100-5,200 MW within the next six years. This surge in capacity is driven by a confluence of factors, chief among them being the monumental growth in data generation and the facilitative regulatory policies instituted by both state and central governments.
Notably, a substantial proportion of the forthcoming investments is tailored to cater to the burgeoning demand for co-location services. These investments are spurred by the insatiable appetite for data storage from hyperscale data operators and industries with stringent data confidentiality requirements, including the Banking, Financial Services, and Insurance (BFSI) sector and IT/ITES (Information Technology and IT-Enabled Services).
The catalysts behind this data centre expansion are manifold. Emerging technologies such as cloud computing, 5G, machine learning, and the Internet of Things (IoT) are poised to usher in a new era of data consumption. Additionally, the proliferation of Generative Artificial Intelligence (AI) has sparked heightened demand for data center capacity to meet the high-computing requirements.
In a statement, Anupama Reddy, Vice-President and Co-Group Head, Corporate Ratings, Icra, said, “While cloud, 5G roll-out, machine learning and internet of things (IoT) are expected to generate enormous data and storage requirements, Generative AI-led high computing requirements present a new wave of demand for DC capacity and a significant opportunity for DC operators.”
The data explosion in India is underpinned by the widespread adoption of innovative technologies, a surging consumption of digital content, and the government's persistent focus on e-Governance initiatives. Ecommerce and digital financial transactions further bolster this data surge. These factors, coupled with conducive regulatory policies like the Digital Data Protection Bill and the granting of infrastructure status to data centers, are primed to foster a thriving data center industry in India.
Critical factors governing the selection of data centre locations include proximity to landing stations, robust fiber connectivity, uninterrupted power supply and stringent disaster-proofing measures.
Mumbai has emerged as the leading data center destination, owing to its proximity to tenant headquarters and these crucial parameters. While Chennai boasts landing stations, its reputation took a hit due to flooding in 2017 and 2018. Emerging data centre hubs in Hyderabad and Pune are attracting large hyperscale operators, setting up extensive data centres close to their operational bases in India.
Collectively, Mumbai, Hyderabad, the National Capital Region (NCR) and Chennai are slated to contribute to roughly 85 per cent of India's installed data centre capacity by 2028.
