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India’s data centre economy to top $8bn in investment

What two years ago was a market in its infancy is now a market rapidly expanding with old and new players investing like never before.

By João Marques Lima

Founder and Editor, The Tech Capital

3 Mins

March 30, 2021 | 2:48 PM BST

The India data centre market is expected to grow at a CAGR of over 12% during the period 2020−2026, when it is expected to cross US$8 billion worth of investments.

According to the latest figures from Arizton Advisory & Intelligence, the market in India is on the rise mostly driven by the rise in digitalisation initiatives, third party data centre service demand, and proposed data localisation laws.

The think tank points out that COVID-19 has been a catalyst for growth in demand for third-party data centres services in India, with several recent announcements concentrated towards hyperscale projects across the country.

The market is also witnessing several new entrants such as Adani Group and EdgeConneX (AdaniConneX), Colt DCS, Bridge Data Centres, Equinix (GPX Global Systems), and Mantra Data Centers, which are developing hyperscale data centre facilities to be operational in 2021 and 2022.

Last year, majority of data centre investments was contributed by Maharashtra, with an investment share of around 70%, followed by Tamil Nadu.

States such as Maharashtra, Telengana, and Uttar Pradesh are offering specific incentives for data centre development, such as land at subsidised rates, waiver on stamp duty and electricity duty, and subsidy on electricity costs. 

Furthermore, in November 2020, Ministry of Electronics & Information Technology (MeitY) drafted a data centre policy in India, which will have a significant impact on the market growth.

The governments of Maharashtra, Tamil Nadu, and Uttar Pradesh have signed multiple MoUs with various data centre operators/developers to build hyperscale data centre campuses.

In terms of investment, Mumbai dominates the data centre market in Maharashtra. The city attracts more data centre investors due to the presence of submarine cable landing stations. A majority of the investment is made by colocation and telecommunication service providers. 

In 2020, Maharashtra witnessed data centre investments of about $990 million. Mumbai attracted investments from colocation providers such as Bridge Data Centres, Colt DCS, CtrlS, NTT Global Data Centers (Netmagic), and Yotta Infrastructure (Hiranandani Group). 

Pune witnessed investments from colocation data centre operators, government organisations, and enterprise data centre operators such as Microsoft, State Bank of India, and Web Werks. 

In terms of colocation, the state attracted investments of around $740 million. Cloud service provider Microsoft is opening its Pune cloud regions, which is expected to be operational by Q2 2021.

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Founder and Editor, The Tech Capital

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