According Investment Information and Credit Rating Agency (ICRA), India’s operational data center capacity to more than double to 2,000-2,100 MW by FY2027 from 950 MW in FY2024, mainly due to the increased pace of digital transformation, as well as the growing push for data localisation. ICRA expects that this would involve investment worth Rs. 50,000-55,000 crore (~US$ 5.9 – 6.5 billion).
In a press release, ICRA, an affiliate of Moody’s, revealed its findings saying that co-location services, backed by hyperscalers, contributed to the majority (80-85 percent) of the data center revenues in the country, and that most of the upcoming investments were geared towards meeting the high demand for these services.
“The low data tariff plans, access to affordable smartphones, adoption of new technologies and growing user base of social media, e-commerce, gaming and OTT platforms are some of the key triggers for data explosion,” explains, Anupama Reddy, Vice President and Co-Group Head – Corporate Ratings, ICRA, adding, “Also, artificial intelligence (AI) led demand, which is expected to increase multi-fold in the next 3-5 years, presents significant opportunities. This, coupled with favourable regulatory policies from the Central and state governments, the draft Digital Personal Data Protection Bill, and the infrastructure status are supporting the DC growth prospects.”
When it comes to major markets, ICRA found that Mumbai is the front runner due to its central location, reliable power and cable landing stations. It contributes more than 50 percent to the current capacity and is expected to remain the key location for the upcoming data center capacity in India. Chennai comes in second, as it enjoys a dense wet cable ecosystem, which offers best latencies.
Moreover, environmental concerns are also impacting investment decisions. ICRA expects data center players to invest in more renewable and sustainable power sources. “Green power, as a percentage of total power consumption, is around 75 percent for the top three global DC operators. However, as a percentage of total power consumption, it is currently below 5 percent for Indian DC players, though this is projected to increase to 20-25 percent by 2028,” found the report.
