Indian Data Centre Market To Grow At 40% CAGR, Reach 1700 MW Capacity By 2025
The Indian data centre market is experiencing remarkable growth, with a staggering 40% Compound Annual Growth Rate (CAGR) forecasted. This growth is set to propel the sector to a 1,700 MW capacity by 2025, attracting an estimated $5 billion in investments. Avendus Capital recently released a report outlining these projections, highlighting the potential for substantial real asset investments in the coming years.
Major players like Amazon Web Services and Microsoft are already making significant investments in India”s data centre infrastructure. For instance, AWS announced a $12.7 billion investment with plans to expand its cloud infrastructure by 2030, while Microsoft pledged Rs. 16,000 crore to establish data centres in Hyderabad. NTT and Google are also expanding their capacity within the country.
The surge in demand for digital transformation during the pandemic has been a driving force behind the Indian data centre market”s impressive growth. Over the past three years, the market has grown by over 48%, increasing from 540 MW in 2019 to over 800 MW in 2022.
Mumbai currently dominates the market, accounting for 48% of the nation”s total data centre capacity, mainly due to its submarine landing stations and robust power infrastructure. Bengaluru follows with 110 MW of total capacity and 70 MW under construction, primarily driven by startup and e-commerce demand. Interestingly, seven cities contribute a whopping 92% of India”s total data centre capacity, with Delhi, Chennai, Hyderabad, and Kolkata leading in terms of total capacity currently under construction.
Looking ahead, Mumbai is expected to play a significant role, with approximately 25% of additional capacity over the next five years being centered there. Hyperscale operators are likely to establish a strong presence in Mumbai. Prateek Jhawar, Managing Director and Head of Infrastructure & Real Assets Investment Banking at Avendus Capital, emphasised that global investors are likely to partner with domestic players due to their land resources, regulatory approvals, and expertise in civil, mechanical, and electrical fit-outs. Additionally, he mentioned the possibility of real estate developers and investors exploring the option of converting their portfolios into Real Estate Investment Trusts (REITs), mirroring global trends.
The Indian data centre market is currently underserved, presenting substantial opportunities for growth. It is expected that returns in this industry will shift towards commercial, industrial, and other real asset sectors. Vaibhav Garg, Vice President of Infrastructure & Real Assets Investment Banking at Avendus Capital, noted that hyperscale developers are already achieving impressive returns, making the sector attractive to a wide range of investors, including private equity, real estate, and infrastructure investors.
Looking forward, the sector is well-positioned for further expansion, with a pipeline of over 3,000 MW (equivalent to 300 MW annually) over the next decade and an estimated capital expenditure of $23 billion. This growth will be driven by increasing data consumption and storage needs, government initiatives promoting data localisation, and the rollout of 5G technology.
