India data centre investment to touch Rs 40,000 crore to double capacity

Data centre capacity in India is expected to double to ~1,700-1,800 megawatt (MW) by fiscal 2025 from ~870 MW last fiscal with an investment of over Rs 40,000 crore.
India data center capacity forecast
The spurt in data and cloud usage created huge demand for data centers. Wireless mobile data traffic grew ~31 percent to ~253 exabytes in 2021.

The launch of 5G services — likely by the end of fiscal 2023 — will further boost demand for data and storage capacities.

“Data centre industry is expected to add ~850-900 MW capacity during fiscals 2023-25, Nitesh Jain, Director, CRISIL Ratings, said.

Mumbai, which accounts for around half of the existing capacity, is expected to add ~300 MW. This growth would be supported by proximal access to sub-sea cables, optic fibre connectivity, uninterrupted power supply and availability of skilled manpower.

Hyderabad, Chennai and Pune will follow suit, and likely to add ~400 MW capacity cumulatively.

Of the ~Rs 40,000 crore investments, a third will be to acquire land, a fifth for substations, and the balance for civil work, purchase of equipment and fit-outs. Capex will also be required for captive renewable energy sources, which are cheaper than grid energy.

“With electricity accounting for 45-50 percent of the operating expense of data centres, there is sharper focus on an optimum mix of grid power + renewables. The share of renewables in data centre power consumption is expected to increase to ~35-40 percent by fiscal 2025 from less than 15 percent now,” Rakshit Kachhal, Associate Director, CRISIL Ratings, said.

Use of renewable power will improve the operating margins of the sector by ~200-300 basis points by fiscal 2025 and help sustain project’s returns on capital employed at 13-15 percent.