India’s data center operational capacity is expected to more than double, reaching 2,000-2,100 MW by FY27 from 950 MW in FY24. This expansion will require investments of ₹50,000-₹55,000 crore, credit rating agency ICRA said.
Key highlights
Dominant Players: As of March 2024, key players such as NTT Global Data Centers, STT Global Data Centers, CtrlS Data Centres, Sify Technologies, and Nxtra Data controlled 85 percent of the operational capacity.
New Entrants: New developers, including Yotta, Digital Connexion, Lumina CloudInfra, CapitaLand, and Digital Edge, are entering the data center market with significant investments, driven by rising demand.
Demand Drivers: The demand for data centers is fueled by factors like low data tariffs, affordable smartphones, growing social media, e-commerce, gaming, and OTT platform usage, along with new technology adoption.
AI-Driven Growth: Artificial intelligence (AI) is expected to significantly boost demand over the next 3-5 years, creating new opportunities in the sector.
Favorable Regulatory Environment: Growth is supported by government policies, the draft Digital Personal Data Protection Bill, and the infrastructure status granted to data centers.
Co-location Services: Hyperscalers contribute to 80-85 percent of data center revenues through co-location services, where they lease space and infrastructure.
Geographic Concentration: 95 percent of existing data center capacity is concentrated in six cities, with Mumbai and Chennai leading due to their proximity to submarine cables, providing better latency.
Green Power Adoption: Top global data center operators use green power for 75 percent of their energy needs, while Indian operators currently use less than 5 percent, but this is expected to increase to 20-25 percent by 2028 due to growing ESG considerations.
