The data center industry in India is poised to attract investments exceeding Rs 45,000 crore (US$ 5.4 Billion) over the three fiscals through 2026 as per a report by Credit Rating Information Services of India Limited (CRISIL) Ratings, a highly-respected Indian credit rating agency.
The report explains, “Large enterprises are increasingly embracing cloud solutions, fuelling the surge in demand for data centres. Furthermore, rising usage and adoption of over-the-top (OTT) platforms is driving up retail data consumption.” It further says that the launch of 5G services will amplify data consumption among retail users, leading to an even greater demand for data centers to store all this data.
The report also points out, “Additionally, there is enhanced regulatory emphasis on local storage of personal data, as stipulated by the Digital Personal Data Protection Act as well as through policies formulated by some of the sector regulators.” Together all these factors will contribute to exponentially increasing the demand for reliable infrastructure to safely store a burgeoning amount of data.
According to Manish Gupta, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings, “To cater to this rising demand for data, the installed capacity of Indian data centres is expected to more than double and reach ~1,700 MW2 by March 2026 from an estimated ~780 MW as of March 2023. This would require investment of ~Rs 45,000 crore. Investments would primarily be concentrated in few cities such as Mumbai, National Capital Region, Chennai, Hyderabad and Pune, with Mumbai alone garnering about a third of these investments.”
The huge demand for data centers is likely to attract the attention of a diverse groups of national and international investors, many of whom may be taking their first tentative steps in this direction. According to the report, “These include not just well-established domestic and global data centre operators and private equity firms but also companies from sectors such as telecom, real estate, and engineering, procurement and construction.”
CRISIL Ratings is a subsidiary of CRISIL Ltd, which is in turn is majority owned by S&P Global Inc., a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.