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India's data centre (DC) operational capacity is projected to more than double to 2,000-2,100 MW by FY2027, from 950 MW in FY2024, driven by the digital boom and data localisation. This expansion will require investments of INR 50,000-55,000 crore. Key players like NTT, STT, and CtrlS currently hold 85% of the capacity, but new entrants are investing significantly. Anupama Reddy of ICRA attributes the growth to rising data consumption, AI, and supportive policies. Hyperscalers, along with BFSI and IT/ITES sectors, are major drivers. Mumbai leads DC capacity due to its robust infrastructure, and operators are expected to shift towards green energy, aiming for 20-25% by 2028.
ICRA projects India's data centre (DC) operational capacity to increase more than twofold, reaching 2,000-2,100 MW by FY2027, up from 950 MW in FY2024. This growth, driven by the digital boom and data localisation efforts, will require investments of INR 50,000-55,000 crore.As of March 2024, key players such as NTT Global Data Centers, STT Global Data Centers, CtrlS Data Centres, Sify Technologies, and Nxtra Data Limited held 85% of the operational capacity. However, rising demand has attracted new entrants like Yotta, Digital Connexion, Lumina CloudInfra, CapitaLand, and Digital Edge, who are making significant investments in the sector. Advertisement
Anupama Reddy, Vice President and Co-Group Head of Corporate Ratings at ICRA, highlighted that the data explosion and localisation efforts are driving a data centre (DC) revolution in India. Factors such as low data tariffs, affordable smartphones, the rise of new technologies, and the growing popularity of social media, e-commerce, gaming, and OTT platforms are key contributors to the surge in data. Additionally, artificial intelligence (AI) is expected to significantly boost demand over the next 3-5 years, offering considerable opportunities. Supportive regulatory policies, the draft Digital Personal Data Protection Bill, and infrastructure status are further enhancing the growth outlook for DCs.
Co-location services, driven by hyperscalers (large cloud service providers), generate 80-85% of DC revenues in India. Most upcoming investments aim to meet the growing demand for these services, primarily fueled by hyperscalers.
The growth is primarily driven by hyperscalers (large cloud service providers) and sectors like banking, financial services, and insurance (BFSI), as well as IT/IT-enabled services (IT/ITES), which demand high data confidentiality and full control over their operations.
Approximately 95% of India's current data centre capacity is concentrated in six cities, with Mumbai and Chennai leading due to their dense undersea cable networks, which provide optimal latency (the time data takes to travel). Mumbai, in particular, stands out due to its central location, stable power supply, and cable landing stations, contributing over 50% of the total capacity. It is expected to remain a key hub for future DC capacity expansion in India.
Due to environmental, social, and governance (ESG) concerns from major tenants, data centre operators in India are expected to invest in green energy for their power needs. Globally, the top three data centre operators source around 75% of their power from green energy. In contrast, Indian operators currently use less than 5% green energy, but this is expected to rise to 20-25% by 2028.
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