Unlocking India's Digital Potential: The Rise of Data Centres

India's rapid digital transformation is reshaping the nation's economic landscape and driving a surge in demand for data centre (DC) infrastructure. As the country embraces cloud computing, artificial intelligence and the Internet of Things, the need for robust, scalable and reliable DC has become paramount. This burgeoning demand has attracted significant global interest, positioning India as a prime destination for DC investment. The country's large and growing population, coupled with its promising economy, has created a massive demand for digital services. Moreover, the government's initiatives to promote digitalisation, such as the Digital India program, have provided a favourable environment for DC development.

India's strategic location, with excellent connectivity to Southeast Asia, Europe and the Middle East, has also played a crucial role in attracting global DC operators. The country's competitive labour costs and favourable regulatory environment further enhance its attractiveness as a DC destination. The country's growing adoption of e-commerce and online education is also driving the need for DCs to support the increasing volume of data generated and processed.

India's DC industry has emerged as a critical component of the country's digital infrastructure, supporting the growth of various sectors such as banking, financial services, e-commerce, healthcare and media. The country's DC market is expected to play a vital role in supporting India's ambition to become a $5 trillion economy by 2025.

Government Support and Growing Demand

The Indian government's initiatives, such as the "Digital India" program, have created a favourable environment for DC growth. The program aims to transform India into a digitally empowered society and knowledge economy. Additionally, the government's push for data localisation has led to increased demand for DC capacity. This demand is further fuelled by hyper scalers, cloud service providers and large enterprises, which are driving the need for DC capacity in India. The rise of online payments and digital services has led to an explosion in data generation, storage and processing requirements, resulting in exponential growth for the DC market. In fact, India's DC market is expected to grow exponentially, with new supply projected to reach up to 250MW every year for the next five years.

Market Overview & Industry Trends

India is experiencing a rapid digital transformation, driving unprecedented growth in its DC market. Mumbai, India's financial capital, stands as the largest DC market, accounting for a significant 54% of the country's total capacity. The city's strategic location, robust infrastructure and government support make it an attractive destination for DC operators. Other cities like Chennai, Hyderabad and Bengaluru are also emerging as key DC hubs.

This rapid growth is reflected in the total colocation DC capacity, which has already more than doubled in the last 18 months, reaching 1 GW. Key sectors driving this demand include:

1. Banking, Financial Services and Insurance (BFSI), with increased adoption of digital channels and online services.
2. E-commerce and Online Retail, driven by growing demand for online shopping and digital payments.
3. Healthcare and Pharma, requiring increased data storage and analytics.
4. Media and Entertainment, with rising demand for online streaming and digital content.
5. Government and Public Sector need DC capacity to support digital governance initiatives.

Future Outlook

India's DC industry is poised for continued growth, driven by five key trends:

Cloud Adoption: Surging demand for cloud infrastructure and services is transforming the DC landscape.

Edge Computing: The need for low-latency, high-performance computing is driving edge computing adoption, enabling faster data processing and analysis.

Data Localisation: Increasing data localisation requirements are fuelling demand for in-country DC capacity, ensuring data sovereignty and compliance.

5G Expansion: The rollout of 5G networks necessitates expanded DC capacity to support the resulting surge in data traffic and infrastructure requirements.

Sustainability: The focus on environmentally sustainable and energy-efficient DC operations is gaining traction, driven by growing concerns about carbon footprint and energy consumption.

As India's DC industry continues to grow, fostering collaboration between government, businesses and technology leaders is critical for sustainable growth. This synergy enables the development of forward-thinking policies, innovative infrastructure and cutting-edge solutions. By leveraging cutting-edge innovations and best practices, India can solidify its position as a global digital hub. This transformation will unlock new opportunities for economic development and social progress by enhancing digital literacy and skills development, promoting entrepreneurship and start-up ecosystems, fostering research and development in emerging technologies, improving digital accessibility and inclusivity and driving sustainable economic growth and job creation.