Data centres to attract INR 1.5 trn investment in next 6 years

Data centres in India are expected to attract investments of INR 1.5 trillion by 2029, according to a report by ratings agency Icra. This will lead to the addition of nearly 5,000 MW capacity of data centres, which is six times the current installed capacity. 

Icra attributed this surge in investments to the ongoing data centre revolution, driven by data localisation and the explosion of data in the country. Additionally, several companies have made announcements about their commitment to invest in data centres. 

Experts said that several factors are driving this growth, including the increasing internet and mobile penetration, the government’s push for e-governance and digital India, the adoption of new technologies (such as cloud computing, IoT and 5G) and the growing user base for social media, e-commerce, gaming, and Over The Top (OTT) platforms.

They further mentioned that the investments will be aided by favourable regulatory policies such as the draft Digital Data Protection Bill, and special incentives from the central and State governments, including subsidies on land and power, exemptions on stamp duty, and discounts on the use of renewable energy and locally procured Information Technology (IT) components.

Mumbai, Hyderabad, and the National Capital Region (NCR) are expected to account for 70-75% of the installed data centre capacity. 

The report expects the data centre industry’s revenues to grow at a compounded annual growth rate (CAGR) of 17-19% between FY23-FY25, as compared to 24.5% during FY18-FY22. With an increase in revenues and better absorption of fixed costs, operating margins are expected to improve and remain in the range of 43-45% over the next three years.

Source:Economic Times