India’s data centre (DC) space has been witnessing unprecedented growth in recent years, with 2021 recording a strong absorption of 116 MW. Cloud, DC and telecom players are seen adopting various strategies to capture a pie of India’s digital growth. DC operators are acquiring land parcels at key DC hubs to provide scalable and seamless options for cloud players leading to the appreciation of land prices at preferred hubs. Cloud players with self-build ambitions have acquired land at new locations as well, in line with their growth strategies. Various state governments have also announced DC policies with various fiscal incentives and related benefits to attract operators. The report covers outlook of the industry as well as gives a review of 2021 scenario
The Indian DC industry is expected to add a capacity of 804 MW during 2022-2024. This huge capacity addition would entail demand for 9.7 million sq ft of real estate space with an estimated investment outlay of USD 5.5 billion in setting up DC facilities. This immense growth will also lead to parallel trends of efficient energy usage, green energy investments, DC-ready human resources and the growth of data driven emerging segments.
Capacity expansion by existing and new players is expected to result in an additional capacity of 804 MW during 2022-2024, translating to 34% CAGR for the period. A notable feature of this supply growth has been that a large share of it has been pre-committed by hyperscalers and is expected to become operational in next three years.
Mumbai and Chennai are expected to witness higher growth owing to their infrastructure advantages. As a result, both the cities will account for 68% of the total capacity in 2024. The addition of new cable landing that would connect these cities, going forward, would also lead to higher available bandwidth. However, landlocked locations like NCR-Delhi would also see growth in capacity addition due to government-led digital initiatives and data demand.
The Indian DC industry is expected to add 804 MW capacity during 2022-2024. This would mean the creation of 9.7 million sq ft of real estate space for this new capacity across India’s leading cities. Owing to its high share of capacity addition, Mumbai is expected to create demand for 6.18 million sq ft, going forward. The comparatively high land cost of the city vis-à-vis other DC hubs will lead to a higher outlay of US$ 3.3 billion for setting up data centres in the city. As Chennai has similar advantages, it would follow with 2.03 million sq ft of real estate space addition at an investment of US$ 1 billion.
India is slated to see increased investment commitment for DC spaces during 2022. Another global DC player, Digital Realty, has announced a JV with Brookfield fund, BAM Digital Realty, to develop and operate DCs in India. Oracle too has announced its plans to increase cloud services in India in partnership with Nxtra DC by expanding its capacity in Mumbai.
Global cloud players have been working towards building their own captive data centres with some states offering incentives for the DC industry. Cloud players, DC operators and telecom operators are all adopting various strategies to capture a slice of India’s digital growth opportunity.
Most DC operators have been acquiring land parcels at key DC hubs to provide scalable and seamless options for cloud players. Various state governments have also announced policies with incentives and benefits to attract DC operators to their states.
DC operators are incorporating sustainability measures by trying to reduce energy consumption as well reduce carbon footprint through use of green energy. Most DC operators were seen tying up with renewable energy players during the year. Some players are also looking at sustainability from a holistic perspective by incorporating energy efficient practices right from the design, build and construction to the operational phase.
India’s DC industry growth has led to high demand for human resources right from construction to the operational stage. India’s existing pool of talent in IT companies that have worked on the in-house data infrastructure can provide the required resources with some training. Bengaluru, India’s leading tech city, has been chosen by a major DC player as a global centre for training over 500 IT professionals.
The demand momentum that had picked up during 2020 has gained pace, with an estimated absorption of 116 MW during 2021 - a 14% y-o-y growth. Hyper-cloud players accounted for 70% of this absorption, as pre-committed capacities were delivered during the year. The need to diversify across regions, as well as the emergence of strategic locations and favourable regulatory policies are leading to an expansion trend across India's key DC hubs.
The strong demand growth has been matched by supply addition of 119 MW during the year, registering a growth of 23% over 2020. Mumbai, Pune and Chennai together accounted for 83% of the total supply during 2021. Hyperscale cloud players have been exploring various availability zones to ensure seamless operations. The expected growth in demand is likely to lead to strong capacity addition during 2022-2024.