India's Data Center Industry Poised For Rapid Growth
The data center industry in India is experiencing a remarkable surge, emerging as a vital asset class in the South and Southeast Asia region. Rapid digital transformation, accelerated by the pandemic, has led to an unprecedented demand for data processing and storage capacity, catering to both consumers and enterprises. India, in particular, is establishing itself as a data center hub, with a data explosion driven by robust growth in data consumption.
The proliferation of digital interactions, encompassing various aspects of daily life, has created a surge in data generation. From booking train tickets to airline reservations, obtaining gas connections, shopping at local grocery stores, and maintaining patient records, every moment generates new data. The average monthly data consumption for the typical Indian consumer is around 25 GB.
India has been creating unique digital infrastructure, including initiatives like CoWIN, ONDC, Aadhaar, and UPI. As a result, the need for secure data storage and management is on the rise. Recognizing this demand, leading global data center companies are flocking to India, while domestic firms are keen to capitalize on the opportunity. This increasing interest in the Indian data center market is drawing investors and industry leaders alike.
At the enterprise level, growth is even more pronounced, driven by organizations” digital transformation efforts. They are focusing on digitizing core services, customer-centric platforms, and smart factories, leading to a substantial increase in data production and consumption. India, with one of the largest user bases, now connects almost every part of the country through 4G and 5G networks, facilitating easy and affordable access to high-speed internet. This access is driving significant data generation and fueling the demand for data centers.
The public sector is also playing a significant role in propelling the data center surge. Public sector undertakings and government enterprises are moving toward third-party colocation data centers, aligning with the government”s focus on digitization and e-governance to streamline operations.
India has now attracted all the global data center majors, lured by the digital aspirations of both citizens and the government. The development of India”s digital infrastructure, often referred to as the “India stack,” including Aadhar, UPI, CoWIN, and the new ONDC (Open Network of Digital Commerce), is gaining momentum. Data centers are fundamental to this digital infrastructure”s success.
As India”s digital momentum continues to surpass even that of the United States, global data center players are offering tailored solutions to meet the country”s specific needs. India”s importance on the global stage is undeniable, as companies like Microsoft are expanding their data center presence in the country.
In response to the growing demand, data center operators are making significant investments. NTT, for example, has become the first Indian data center operator to build a captive submarine cable. Reliance Industries, through its JV with Brookfield Infrastructure and Digital Realty, is investing heavily in data centers, while Airtel and Vi Business are rapidly expanding their data center offerings.
The growing list of players also includes non-telecom companies such as AdaniConneX, which aims to develop a 1 GW national data center platform. This surge in investments and expansions highlights the seriousness and commitment to this burgeoning industry.
However, the journey to fulfilling the increasing demand for data centers is not without challenges. Issues include the availability of reliable and affordable power, connectivity through sub-sea cables, ensuring compliance with government regulations, personal data protection, and maintaining data security on a large scale. Supply chain disruptions and a shortage of skilled manpower can also push up construction costs.
Nevertheless, the data center industry is determined to overcome these challenges, as the demand for data storage and processing continues to grow exponentially. India is currently projected to experience a growth rate of over 10% CAGR in data center capacity. As more technologies like 5G and IoT come into play, data center requirements are set to explode, making this sector a critical part of India”s digital future.
In conclusion, India”s data center industry is on the cusp of a significant transformation, driven by digital innovation and exponential data generation. This industry plays a pivotal role in supporting the country”s digital infrastructure, and as India”s digital momentum surges ahead, data centers are set to remain a key component of this evolving landscape.
