A report by JM Financial, an investment banking firm in India, has revealed that the country could emerge as a preferred data hub for the entire region, and attract as much as US$ 20 billion in investments over the next five years. This is excluding expected investments worth another UD$ 60 billion dollars into cloud infrastructure.
It said that both structural and cyclical trends are fueling the growth of data centre demand. “A large internet user base generating a trove of data, the government’s data localisation push and artificial intelligence (AI) are some of the structural tailwinds,” JM Financial said in a press release.
A closer look at the numbers
As per the report, while India generates 20 percent of global data, it only accounts for 5.5 percent of global DC capacity, and that the country has one of the world’s lowest DC densities at 14 petabyte/MW. According to the report, in order to achieve 50 percent of China’s DC density, India needs 5GW of total capacity by 2030. This aligns with the current announced under-construction + planned capacity of 3.3GW by 2028.
Explaining its arithmetic with reference to the above, it said, “At an average capex/MW of Rs 465 million, this will translate into an incremental capital outlay of USD 20 billion over the next 5 years.” The report adds that the investments on cloud infrastructure (servers, etc.) could be an additional USD 60 billion.
“While a majority of the cloud infrastructure spend will be done by hyperscalers, in our view, capex towards DC capacity (USD 20bn) alone could entail equity issuance of USD 10bn (assuming average D/E of global players). Still, these will merely serve India’s domestic demand,” the report added.
Industry watchers upbeat about India’s DC market
These findings are in line with what a lot of other research agencies and market watchers have been saying.
Earlier this year, CBRE released a report titled 2024 India Data Center Market Update, saying that rapid growth in India’s data center sector is expected to continue in 2025. It found that India’s total DC capacity had reached approximately 1,255MW between January and September 2024, and was projected to expand further to around 1,600MW by the end of 2024. Moreover, nearly 475MW capacity was under construction across several cities, adding credence to its projections for 2025.
Other industry watchers and research organizations have also expressed enthusiasm surrounding India’s data center industry. According to JLL India, the DC industry is expected to add a staggering 604MW capacity in the next two and a half years (H2 2024-2026). In its report titled Is India Building Enough to Power its Digital Transformation, Cushman & Wakefield finds that by 2028, India will have 3 times the installed capacity, with a total IT load of 3.29GW. Similarly, Investment Information and Credit Rating Agency (ICRA), an affiliate of Moody’s, expects India’s operational data center capacity to more than double to 2,000-2,100MW by FY2027. ICRA estimates that this would involve investment worth Rs. 50,000-55,000 crore (~US$ 5.9 – 6.5 billion).
