India's data centre capacity to double in three years: CareEdge
Mar 27, 2024
New Delhi [India], March 27 : India's data centre industry has entered the growth stage, and the capacity is expected to double up in the next three years, from approximately 0.9 Gigawatts (GW) in 2023 to 2 GW in 2026, according to CareEdge Ratings.
A data centre is typically a large group of networked servers used by organizations for the remote storage or distribution of large amounts of data.
This additional capacity built up has created substantial investment prospects due to the estimated capex requirement of Rs 50,000 crore in the next three years.
CareEdge Ratings report highlights significant under penetration of data center capacity in India.
As per the report, India has data center capacity share of only 3 per cent globally despite generating 20 per cent of the global data. While mobile data usage in India is highest globally when compared with exabytes usage per month.
CareEdge Ratings expects need for data localization to trigger compulsorily investment in data center, and cost-saving incentives by States to attract investments.
"The growth plans has also created substantial investment prospect and CAREEdge Ratings estimates a capex of Rs.50,000 crore in this space over the next three years till 2026. However, the project execution challenges, in terms of land and equipment availability and management of vendor ecosystem needs to be addressed for the fructification of the planned capacity addition planned," said Puja Jalan, Associate Director, CareEdge Ratings.
Further, cost per MW of setting up data center has also been rising with costs escalating to levels of Rs 60-70 crore per MW from average per MW cost of Rs.40 - Rs.45 crore, added Puja Jalan.
The capacity growth has been complemented by the increased absorption.
CareEdge Ratings in its report cited that the absorption levels have gone up from 82 per cent in 2019 to 93 per cent in 2023. As capacity was added, industry players' revenue increased by nearly 25 per cent CAGR from FY17 to FY23.
Over the next three to four years, revenue growth is anticipated to continue, with CareEdge Ratings projecting a 32 per cent CAGR growth during FY24-26.
"India is making the shift from a developing to a developed market economy, and the digital revolution is spurring economic expansion and producing vast amounts of data. Some of the key drivers of this rapid digitization are e-commerce, internet payments, online streaming, and adoption of new technologies such as 5G, IoT, and AI. Share of Edge data center is also expected to increase for meeting growing demand from tier II and tier III cities for ensuring lower latency," said Maulesh Desai, Director, CareEdge Ratings.
