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Indias data centre capacity is expected to grow nearly five-fold over the next five years, supported by around USD 45 billion in facility capital expenditure. The expansion could unlock a USD 45 billion investment opportunity across key sectors, according to Jefferies.
Data centre operators provide enterprises and Cloud Service Providers (CSPs) with physical infrastructure, fibre connectivity, power and cooling systems on a rental basis. Server-related capital expenditure, meanwhile, is typically borne by CSPs or enterprises themselves. At the same time, India is emerging as a regional data centre hub. Over the past five years India's colocation data centre capacity has increased by 5x to 2GW, the report noted. This growth is supported by rapid internet and e-commerce adoption, increasing demand for lower content latency, and the digitisation of government records and enterprise systems. At the same time, India is increasingly positioning itself as a regional data centre hub, supported by several structural advantages: (1) power costs and capital requirements that are, on average, 2540% lower than in competing markets; (2) a 20-year tax holiday for cloud providers, which is expected to accelerate hyperscaler investments and presence in India; (3) regulations such as the DPDP Act and data-localisation requirements, which are encouraging companies to store and process data domestically; and (4) a stable political environment with relatively limited geopolitical risk. However, it should be noted that India's data center market is still at an early stage, with installed colocation capacity of around 2GW today. Demand is concentrated among hyperscalers, which account for ~60% of the market, followed by BFSI at ~15%. With utilisation already at ~9597%, significant capacity additions will be required to meet growing demand. We expect collocation data center capacity in India to grow 5x to ~10GW over the next five years, making India one of the fastest-growing data center markets globally, Jefferies noted. However, it added, this growth will require significant investment across the data center value chain. We expect that India could see ~US$45bn of facility capex over the next five years. This would create opportunities not only for data center operators but also for construction companies, real estate developers, power equipment suppliers, cooling solution providers and network infrastructure companies. (ANI)
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