Workers inspect an Indian national flag ahead of the country’s 75th Independence Day celebrations at a workshop in Mumbai on August 3, 2021. (Photo by Indranil MUKHERJEE / AFP)

Here’s why India is witnessing a data center boom

  • The country is among the major players in the data center sector in the APAC region.
  • India’s data center industry has been primarily concentrated in the top four cities — Mumbai, Delhi, Bengaluru, and Chennai.

In India, the need for data center infrastructures is growing exponentially, as cloud adoption, as well as data consumption and generation by half a billion digital users, are reaching unprecedented levels. As a result, India is among the major players in the data center sector in the APAC region. 

A report by JLL India showed Indian data center sector would need US$3.7 billion over the next three years to meet the industry requirement for six million sq ft of development. It also said India’s data center landscape would continue to evolve owing to the growing reliance on digital technologies, 5G rollout, IoT-linked devices, cloud adoption, and data localization. 

It is also interesting to note that last year, the data center industry in India consumed 102 MW of power, surpassing even the key markets of Europe and the US. And as the data center landscape continues to evolve, the industry is expected to grow exponentially to reach 1,007 MW by 2023 from its existing capacity of 447 MW.

India and its growing data center market

As it is, India accounts for one to two percent of the global market. Since fiscal 2016, the industry has been recording an annual growth of 25-30 percent to touch $1 billion in fiscal 2019, a Crisil Research report said. The country’s data center industry is primarily concentrated in the top four cities – Mumbai, Delhi, Bengaluru, and Chennai, accounting for 60% of the total data center sites and over 75% of IT load capacities. Notably, Mumbai has 40% of the total installed capacity.

A separate Global Data Centre Colocation & Interconnection report by Structure Research (SR) said that the Asia Pacific region will account for half of the global colocation market by 2025, driven by large emerging markets like India. Mumbai and Pune were named as key opportunity markets in India with a combined projected MW of built-out critical IT load capacity growth to reach over 470MW by 2025.

In terms of policies, the government of India has drafted a policy for the data centers — This is one of the biggest reasons for the surge in the number of data centers. The Ministry of Electronics & Information Technology said, under this policy, the government would provide ‘infrastructure status’ for the data center sector, bringing it on par with industries such as Railways, Roadways, and Power. The new status will ease the process of availing long-term credit from domestic and international lenders. Basically, the policy will also simplify clearances to set up data centers in India.

Additionally, the secretary of MeitY Ajay Prakash, said the government is working on a scheme for a hyperscale data center to incentivize investments. Prakash also said the goal of this scheme is to boost the capacity of the existing data center ecosystem and work on segments such as drones and robotics to develop their manufacturing.

Big names join India and its booming data center sector

The investment within the industry has inevitably gone up. As per the Anarock-Mace report, in 2020, the Indian data center industry attracted close to US$977 million in private equity and strategic investments since 2008, of which nearly 40%, or approximately US$396 million were infused between the January-September 2020 period alone.

Companies like Yotta Infrastructure, NTT-Netmagic, STT GDC India, Sify Data Centers, CtrlS, and others, are building hyperscale data centers and data center parks in India, and the new few years will see the entry of newer players like Adani Group, Colt DCS, Singapore-based Ascendas-Singbridge Group, and more. 

More big tech firms are collaborating with local telcos to expand their cloud services presence. For instance, Amazon has partnered with Airtel to sell AWS to its customers. And Microsoft formed an alliance with Jio Platforms to extend the reach of Office 365 and Microsoft services.

India currently has 126 third-party data centers (colocation or hyperscale) spanning 7.5+ million sq. ft, and a cumulative IT power capacity of 590+ MW.

“These third-party centers are owned and or operated primarily by 53 players, while the capacity is concentrated among the top 12 players who operate 95% of the total IT power capacity in the country,” Anarock-Mace report said.