India is set to become a leading global data centre hub: Survey

V Nagarajan

India’s data centre stock is expected to grow at a CAGR of 21% between 2024 and 2030 to reach 3,400 MW IT by 2030, according to Savills survey. Data centres in India are primarily concentrated in Mumbai, Chennai, Bengaluru, Hyderabad, Pune and Delhi-NCR due to their connectivity, infrastructure, power availability, and demand from enterprises and cloud service providers.

Mumbai is often regarded as the data centre capital of India due to its robust infrastructure, proximity to undersea data cable landing stations and financial hub status. It is followed by Chennai, a key location for data centres, complimented by multiple submarine data cable landing stations, which make it ideal for data centre establishments and global connectivity.

In 2024, absorption of 407 MW IT capacity and supply addition of 191 MW of IT capacity was witnessed across cities. This demand was driven by hyperscalers, BFSI (Banking, Financial Services, and Insurance), IT & ITeS, and service sectors, all relying heavily on data centre operators.

In 2024, Mumbai maintained its lead, contributing 53% to total absorption, followed by Hyderabad at 14%, Chennai and Pune at 10% each. The overall operational capacity stood at 1,110 MW IT as of 2024, reflecting a compounded annual growth rate (CAGR) of 22% since 2014. Hyperscalers accounted for 22% of the total stock, while enterprises held 10%. The remaining 68% was utilised by a combination of hyperscalers and enterprises, showcasing a diverse utilisation pattern within the data centre industry.

Considering the proliferation of internet usage and the advent of 5G, India’s data centre market was already primed for rapid expansion. Realising the growth potential, the government has granted ‘Infrastructure’ status to the data centre industry, resulting in easier access to financing and investment incentives, while the proposed National Data Centre Policy aims to enable ease of doing business, simplify clearances for setting up data centres, and implement a Data Centre Incentivisation Scheme (DCIS) to foster a favourable ecosystem for data centre operations.

Data centre stock is expected to grow at a CAGR of 21% between 2024 and 2030 to reach 3,400 MW IT by 2030. The annual growth in capacity varies from 8% to 46% across different cities. Higher annual growth is likely to be witnessed in emerging cities such as Kolkata (46%) and Hyderabad (44%). Kolkata is gaining traction as it serves as a gateway to Eastern and Northeastern India, with proximity to a planned undersea cable landing station expected to be operational by 2026, while Hyderabad and Ahmedabad are benefitting from growing IT & ITeS and manufacturing industries.

Outlook: The current momentum positions India as a promising global data centre hub. We project a strong demand for data centres in India in 2025, with an estimated demand of over 450 MW IT across major cities, while supply addition is expected to reach 600 MW IT during the same period.

Given the country’s rich network connectivity, cost advantages, availability of skilled labour, low climate risk and strong data protection laws, India is well positioned to serve as a leading global data centre hub. We expect data centre stock to increase to 3,400 MW IT by 2030 across major cities.

There has been a surge in demand for edge data centre set-ups in Tier II and Tier III cities due to increased 5G penetration and mobile application usage and increasing demand on the same. Tier II & III cities such as Bhubaneswar, Patna, Lucknow, Jaipur, Kochi, Vizag, Coimbatore, Madurai, Raipur and Hubli are expected to witness higher activity with growing demand for data centres.

Although the major take-up has been from hyperscalers across cities, enterprise colocation is witnessing significant growth. Factors such as high CAPEX and OPEX and other aspects such as the high cost of security systems and high-performance GPUs, and high real estate costs are making it more appealing for enterprises. period.

Apart from colocation services, data centre operators are increasing their service offerings to networking, private and public cloud, GPU-powered solutions and other managed services.

Edge data centres are a big opportunity in India. Edge data centres are smaller and closer to customers, and away from submarine cable networks. Smart City and Digital India initiatives will also create demand for Edge data centres.

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