May 19, 2023
The industry is set to witness a projected compound annual growth rate (CAGR) of approximately 40%
The Indian data centre market has increased from 540 MW in 2019 to over 800 MW in 2022
Mumbai currently accounts for around 48% of the country's total data centre capacity
Seven cities in India contribute 92% of the total data centre capacity
The data centre (DC) market in India is experiencing rapid growth, with a projected compound annual growth rate (CAGR) of approximately 40%, and attract investments totaling US$ 5 billion by 2025, according to a report by Avendus Capital.
To meet this growing demand, there are plans to build a capacity of 1,700 MW of DC infrastructure by 2025, driving a wave of real asset investments. According to media reports, this growth trajectory has gained momentum with AWS’s recent announcement of a US$ 12.7 billion investment in expanding cloud infrastructure in India by 2030. Microsoft has also committed INR 16,000 crore to establish data centres in Hyderabad, while NTT and Google continue expanding their capacity. .
Over the past three years, the Indian data centre market has seen impressive growth, with installed capacity increasing from 540 MW in 2019 to over 800 MW in 2022, representing a growth rate of over 48%. This surge can be attributed to the increased demand for digital transformation across businesses, driven by the challenges of the pandemic.
As per the report, Mumbai currently leads the way among Indian cities, accounting for around 48% of the country’s total data centre capacity of 800 MW. The city’s robust infrastructure, including submarine landing stations and reliable power capacity, has made it an attractive destination. Mumbai currently has a capacity of about 380 MW, with an additional 530 MW under construction, as cloud players aggressively expand their presence in the city. Bengaluru follows closely behind with a total capacity of 110 MW and 70 MW under construction, with demand primarily coming from startups and e-commerce companies.
Seven cities in India contribute 92% of the total data centre capacity, with Delhi, Chennai, Hyderabad, and Kolkata showing significant growth potential through ongoing construction projects.
Approximately 25% of the additional capacity to be added in the next five years will be in Mumbai, attracting numerous hyperscale operators to establish their operations there. Global investors are expected to partner with domestic players, leveraging their access to land banks, regulatory approvals, and expertise in infrastructure development.
Developers anticipate a pipeline of over 3,000 MW, equivalent to 300 MW per year over the next decade, requiring a capital expenditure of US$ 23 billion. The expected surge in data consumption, storage demands, government initiatives on data localization, and the rollout of 5G technology will be the key drivers of the industry’s future growth.