Around 1 GW of colocation capacity is under various stages of construction, with well over half of this new supply expected to come up in Mumbai, according to Cusman & Wakefield’s H1-2022 foercast.
This forecast takes into consideration the land parcels that were acquired by operators with visibility to commence construction in the next few quarters. With that, the total colo supply in next five years would reach around 1.48 GW, the report said.
This translates into a healthy growth of 63% in colo capacity by 2027. Moreover, total installed colo capacity (2.39 GW) at the end of 2027 across the top 7 cities.
India’s current capacity of 906 MW, which until a few years ago was barely in the 600s, may still be small when compared globally. However, greenfield projects of over 1 GW are under development by Colocation firms in India. This would take the total installed capacity to nearly 2 GW in the next five years.
New Entrants
In the last decade, Singapore’s ST Telemedia (STT) and Japan’s NTT have been present in the country. Now, since the last few years, some of the largest data centre operators, including the likes of Capitaland, Equinix and Digital Realty, have announced significant capital investments.
Equinix acquired GPx and Digital Realty has partnered with Brookfield. Additionally, other operators such as Iron Mountain, Edgeconnex and Yondr also entering India through joint ventures with local companies and through private equity companies. Edgeconnex has a partnership with Adani and Iron Mountain has a partnership with Web Werks.
Growth Beyond Mumbai
Apart from Mumbai, which is the pre-eminent destination for new campuses, Chennai and Delhi-NCR (Noida) are expected to add substantial colo supply with the recent policy initiatives and infrastructure improvements driving immense interest from both domestic and foreign operators. Chennai’s submarine cable infrastructure and the state government’s initiatives to improve fibre connectivity has driven greater activity with larger greenfield projects likely to cater to rising demand from cloud tenants over the forecast period.
Mumbai remains the leading destination and the first port-of-call for most data center firms. The city currently accounts for well over half of the installed capacity with another 500 MW under development. Chennai is fast emerging as the second most attractive location which is supported by the second highest undersea cables after Mumbai and attractive policy incentives.
Delhi NCR and Hyderabad are markets with immense potential and the latter, in particular, has attracted large investments from cloud majors. As per our estimates, based on publicly announced plans of various data centre firms, India might witness a total fresh investment of about USD 15 bn over the next 5 years.
Growth Drivers
The data localization law that is currently under formulation is also expected to augment the volume of data stored by enterprises locally. Several states have either created, or are in the process of creating, policies to incentivize data center by offering tax benefits on acquisition of land or equipment, uninterrupted power supply, deployment of renewable energy and effecting changes in building codes to simplify construction regulations.
Apart from the data localization law, other drivers include data usage, which is one of the largest in the world as India is home to nearly half a billion smartphone users. Additionally, 5G connectivity, cloud computing and sustainability are other factors that will drive the data center market in India.
