Indian data center industry to receive Rs 1.5 lakh crore investment

Indian data center industry is likely to witness 4,900-5,000 MW of capacity with an investment of Rs 1.5 lakh crore in the next six years, according to credit rating agency ICRA.
American Tower Edge Data Center solutionRevenues of Indian data center industry are expected to increase at a CAGR of around 17-19 per cent during FY2023-FY2025, supported by an increase in capacity utilisation and ramp-up of new data centers.

Indian corporates like the Hiranandani Group, the Adani Group (in JV with EdgeConnex), the Reliance Group and foreign investors like Blackstone, CapitaLand, Princeton Digital Group (PDG) and Big Tech firms like Amazon and Microsoft have started investing massively in data centers in India.

“ICRA expects the sector to witness a six-fold increase in capacities in the next six years, with Mumbai, Hyderabad and Delhi-NCR to account for 70-75 per cent of the installed DC capacity,” said Anupama Reddy, Vice President and Co-Group Head, Corporate Ratings, ICRA.

Mumbai and Chennai have maximum landing stations. Mumbai is the preferred location for a data centre operator.

Chennai’s reputation as a main data center location took a dent due to the floods of 2017 and 2018.

The other key emerging locations are Hyderabad and Pune, wherein some of the large hyper scalers are setting up huge data centers closer to their operation bases in India.

The key triggers for digital explosion in India are the increasing internet and mobile penetration, the government’s thrust on e-governance/digital India, adoption of new technologies (Cloud computing, IoT and 5G, etc), growing user base for social media, gaming, e-commerce and OTT platforms.

Operating margins for data center operators in India are likely to improve and remain in the range of 43-45 percent during the next three years.

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