India’s data centre boom starts now and requires $5bn in investment

If over the last two to three years operators - national and international - have tiptoed into India, 2021 is set to be the first page of a new chapter in India’s data centre history books with the sector set to triple its MW by 2025.

By João Marques Lima

Founder and Editor, The Tech Capital

4 Mins

February 03, 2021 | 12:00 PM GMT

India has long been touted as a nation which would see a fast, almost “in one go” investment spree to build its digital infrastructure footprint across the 1,269,219 sq mi nation. That boom seems to have arrived.

According to real estate services company Anarock, and Mace, a London-based consultancy and construction company, India is set to become home to at least 28 large hyperscale data centres by the end of 2023. 

According to sources who prefer to remain anonymous, the number of hyperscale sites is in fact expected to top well above the 28 facilities projection, The Tech Capital can reveal.

Mumbai, Delhi, Hyderabad, Chennai, Pune and Bengaluru (known locally as the ‘Silicon Valley of India’) are set to become largescale data centre hubs for national and international firms, big and small. 

At least two international US-based data centre operators are set to announce hefty investments across the country in 2021, with this trend expected to be copied by other providers.

In its report – (re)Imagine Data Centers: Running India’s digital economy – JLL predicts a tripling of data centre capacity from today’s 375 MW to 1,078 MW by 2025.

Ramesh Nair, CEO and country head, India, for JLL, said in the report’s preface: “The data centre industry is expected to add 703 MW capacity by the end of 2025, translating into an opportunity of 9.3 million sq ft of real estate development. Mumbai is expected to garner a significant share of this impending opportunity owing to its existing data centre infrastructure, followed by Chennai and Hyderabad. These capacity additions would require greenfield investments to the tune of US$4.9 billion to fuel the future development of the sector.

“With increasing dependency on the sector, growing investor interest and stable long term returns, data centre as a real estate asset class is poised to perform remarkably in times to come.”

The Covid-19 impact

The global pandemic that has brought the world to a standstill several times over the last 10 months, has had two very opposite effects on the Indian data centre market.

On one hand, data consumption has skyrocketed, on the other, several projects were put on standby and are set to be put to motion during 2021.

Real estate giant JLL, estimates data consumption to have grown 14% during lockdown. In its turn, think tank Crisil reported that India’s data consumption has seen a sharp 38% rise year-on-year for FY21 on account of Covid-19. 

Analysts expect the industry to grow at 25-30% CAGR to US$4.5-5 billion by FY25. Growth drivers include an exponential surge in data being generated and growing need for local data storage in line with the government’s thrust on data localisation.

Such market shifts have driven a surge in data centre investment, which according to Anarock-Mace, amounted to nearly $977 million in private equity and strategic investments since 2008, of which approximately $396 million were infused between January and September 2020 alone.

However, Arizton’s researchers have highlighted that Covid-19 has also had an impact in the sector with several projects due to open in 2020, being postponed to 2021.

In one of its latest in-depth market forecast reports, 451 Research’s Dan Thompson (principal research analyst – data centre services and infrastructure) and Jia Lyn Low (research analyst – data centre services and infrastructure), said: “The Indian data centre market is currently witnessing aggressive growth due to increased interest from both local and international enterprises and service providers. Much of

the growth is being fuelled by impending data sovereignty laws, but also by a number of government-backed initiatives and incentives, as well as regional influences.”


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João Marques Lima

Founder and Editor, The Tech Capital

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