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India's data centre industry must move beyond fragmented service models and adopt integrated lifecycle partnerships combining engineering, AI infrastructure, regulatory expertise and financial structuring to support the next phase of growth, according to a report by KPMG.
The report stated that the future of India's data centre market will depend on companies that can provide end-to-end integrated services rather than operating through separate providers working in silos. It stated "By blending engineering, regulatory mastery, and financial structuring, the lifecycle model captures the "once-in-a-generation" opportunity in India's data economy". According to the report, India is witnessing rapid digital infrastructure expansion driven by data localisation requirements, rising artificial intelligence workloads and increasing adoption of 5G technology. KPMG said the biggest challenge for the sector is no longer lack of demand but the complexity involved in scaling infrastructure efficiently. The report stated that the current fragmented model involving separate providers for construction, cooling, technology and operations is creating delays, accountability issues and operational inefficiencies. As part of the suggested way forward, KPMG recommended the adoption of an "Integrated Lifecycle Partner" model that manages every phase of the data centre lifecycle including planning, construction, deployment, operations and maintenance under a single framework. The report said future growth would increasingly depend on specialised AI-ready infrastructure such as liquid cooling systems and high-density power frameworks, as traditional air-cooling systems are not capable of handling modern graphics processing unit (GPU)-driven AI workloads. KPMG also highlighted the need for stronger regulatory and compliance capabilities as companies deal with evolving requirements under the Digital Personal Data Protection (DPDP) Act and government procurement norms. According to the report, integrated service providers with expertise in navigating regulations, land acquisition, power agreements and government approvals would be better positioned to support global investors entering India's data centre market. The report further stated that sustainability and ESG compliance would play a major role in attracting international investments into India's data centre sector. Efficient power usage and renewable energy agreements would become increasingly important as data centres remain highly energy-intensive operations. KPMG estimated that India's overall data centre sector revenue could reach USD 45.69 billion by 2033, while the AI-specific data centre infrastructure market could rise from USD 588.6 million in 2024 to USD 3.55 billion by 2030, growing at a compound annual growth rate of 35.1 per cent. The report added that the opportunity in India's data centre market remains significant but time-sensitive, as major players are expected to consolidate the sector by 2030. According to KPMG, companies that can combine physical engineering, AI readiness, regulatory expertise and financial structuring into a single lifecycle partnership model are likely to emerge as leaders in India's next phase of digital infrastructure growth. (ANI)
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