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The Indian Data Center Opportunity
The Indian Data Center Opportunity

September 19, 2024

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India is becoming a digital powerhouse. It generates about 20% of the global data. But our country only accounts for about 3% of the global data center capacity. This gap shows the massive potential for data center infrastructure. With rapid adoption of newer technologies like Artificial Intelligence (AI), Generative AI (GenAI), 5G, and the Internet of Things (IoT), the amount of data we consume and generate is set to explode. According to Moody’s this digitalization is expected to drive approximately Rs 1.5 lakh crores into investments in data center into next 5-6 Years.

According to CBRE, With the increasing number of Global Capability Centers entering India, the data center capacities will double every year or two. Although the segment is highly capital intensive, there are entry barriers and not everyone can step in. According to CBRE, South Asia, India has a data center capacity of 950MW, excluding China. India overtook major countries such as Australia, Hongkong, Japan, Singapore and Korea. It is expected to add 850 MW during 2024 to 2026, higher than major Asia Pacific countries. As per Savills India, which is a global real estate firm, India has already added 71MW of data center across key market during the first half of 2024 led by high demands in BFSI, Hyperscalers, IT and Other Sectors. It is growing at a CAGR of 22% year on year since 2014.

China has recently launched the initiative Eastern Data, Western Computing", in early 2022 as part of President Xi Jinping' initiative of Digital China. In the past few years, China has invested $6.12 Bn in Data center capacities over the past few years. Although USA has restricted the exports of advance computing products to China, the country is making its own efforts to build local computing strengths. Beijing is also attracting private capital other than government investments.

The data center market in South India growing rapidly and contributed 27% of the overall Indian Data center capacity. The top 3 markets in South India are Mumbai, Bangalore and Hyderabad. There are 3 primary reasons for this growth which is strong infrastructure, skilled workforce and national underwater cables. It is expected that this region will be responsible for the growth of 65% increase in capacity by 2030. The top players of India are Ctrls, STT, NTT, Nxtra, Sify, Adani and Reliance groups which are making significant strides in the market.

However, there are certain challenges in the growth of data centers. Data centers are significant consumers of electricity, using approx. 2% of the world’s power and emitting C02 equivalent to that of airline industry. Another aspect is cooling which is critical aspect to data center design. Some firms are aiming to power their data centers with 100% of renewable energy by 2030 which is an optimistic step in the right direction. Others are using hard drives that use less space and lesser power. Innovative firms are using large fans instead of liquid cooling that is water guzzling.

With significant steps in the green data center industry, India can easily pose itself as a leader in the data center industry.

 

 Source: ET, CBRE, Moody, STTGDC Website.

 


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Madhumay
Deputy Manager - Research

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