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India to add 693 MW of data centers by 2026: Report
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Growing digital public infrastructure, 5G rollout and use of new technologies like artificial intelligence (AI) and Internet-of-Things (IoT) devices will add 693 MW of data centres in India between H2 2023 to 2026, real estate consultancy JLL said in a report on Thursday. Besides, data protection laws and state incentives signal a fresh set of demands emerging for the data centre industry, it said.
This would entail a demand for 8.8 million square feet of real estate space. Data centre infrastructure and real estate construction would require investments of $4.4 billion until 2026.
According to the report, the Indian data centre industry added 57 MW during H1 2023, which is 34% lower than 86 MW added in the same period last year.
"The capacity expansion would create demand opportunities across the value chain in real estate construction, hardware infrastructure and renewable energy. The pandemic-related spurt in demand and delays in deliveries led to higher deliveries in H1 2022, while the first half of 2023 witnessed steady supply," the report added.
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"The recent technological and hardware partnership developments among leading players signal the huge growth potential. The potential demand from generative AI is gaining credence and is expected to grow substantially over the next 12-18 months driving demand for DCs," Rachit Mohan, APAC Lead – Data Center Leasing and Head - Data Centre Advisory, India, JLL said.
The first half of 2023 has been a period of calibration as the DC industry gears up for the next level of growth, it said. The operational capacity of the Indian DC industry is expected to grow to 1,481 MW in 2026 from 778 MW as of H1 2023. "Mumbai is expected to account for a 45 percent share of capacity addition followed by Chennai at 32 percent," Samantak Das, Chief Economist and Head of Research & REIS, India, JLL, said.
The H1 2023 witnessed the absorption of 66 MW compared to 89 MW in H1 2022, a 26 percent decline due to demand moderation for public cloud services. However, the BFSI segment witnessed higher growth to align with regulatory requirements. Similarly, enterprise demand increased to save on capex costs.
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Needless to say, India is becoming a prominent digital ddata centre hub with many domestic infrastructure firms, from Adani Group and L&T to Hiranandani Group as well as global giants such as NTT, Google, Microsoft and Amazon, are creating Greenfield data centres in the country or increase the capacity of their existing data centres.
With companies pouring in billions of dollars, about 4,900-5,000 MW of data centre capacity is expected to be added in the next six years, according to research firm ICRA Ratings, involving investments of nearly Rs 1.5 lakh crore.
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With 138 data centres, India is currently the world’s 13th largest market. And 45 new data centres are expected to pop up by 2026, as per research by ANAROCK-Binswanger published in August last year.
India's data center market, valued at $4.35 billion in 2021, is likely to touch $10.09 billion by 2027, growing at a CAGR of 15.07%, according to an Arizton research report. Increased adoption of the cloud and industry-friendly policies have helped the Indian data center industry grow. Experts believe, with the Indian government’s granting infrastructure status to data centers with more than 5MW capacity earlier this year, has made it easier for companies to access institutional credit at lower interest rates and also to attract foreign investment.
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