India’s data centre industry is expected to double capacity by 2023, on the back of increased digitalisation, rising cloud adoption and ambitious growth plans of operators.
According to JLL’s ‘H1 2021 India Data Center Market Update’, the acceleration of digitalisation has forced enterprises to scale up their IT infrastructure. As a result of digital upgrades, a strong demand for colocation or cloud facilities, across India.
“The demand momentum which picked up pace in 2020, continues to grow unabated. The Indian data center industry witnessed 46.4 MW absorption during H1 2021 -equivalent to 90 per cent of supply addition during the period (H1 2021), indicating robust absorption growth,” said Rachit Mohan, Head, Data Center Advisory – India; Co-Head, Office Leasing Advisory – Mumbai, JLL..
Demand has been expanding rapidly due to increasing digital usage emerging from distributed workforce, growing data security concerns and business disruptions.
Banking and financial services are adopting hybrid options to meet digital growth. Home-grown video and gaming platforms in midst of robust user growth are also fuelling the data centre demand. Further, telecom players are formulating the roll out of 5G which is expected to drive exponential growth in data consumption.
Investments pouring in
“Global investors and data centre players have increased their commitment during the last six months, announcing joint ventures with operators to setup sites. Investment commitments to the tune of USD 3 billion highlight the growth potential, with the data centre industry expected to double its capacity and cross the 1GW mark by 2023.
Mumbai which currently accounts for 45 per cent of the total capacity, is expected to further add 267 MW between now and 2023. Various states have also been providing incentives for data centre industry as they want to join the next leg of technological change,” said Dr Samantak Das, Chief Economist and Head of Research & REIS (India), JLL.
Data centre operators are adopting large land acquisition strategies to fulfil the long-term requirements of hyperscalers (large cloud players and occupiers with massive computing requirements). These operators would provide occupiers with flexibility in terms of availability zones, fiber pathways and power provisions required for large scale expansions in less time.
Players are also adopting strategic alliances by investing in new submarine cables to meet the growing demand. Additionally, investors and global data centre players have increased their commitment during the last six months in the India market by announcing joint ventures to meet expected demand.
In July, Hyperscale data centre company Yondr Group, in a joint venture partnership with Everstone Group, announced that it is investing $1 billion to open data centres across multiple locations in India.
Similarly, earlier this year, Storage and information management services company Iron Mountain entered into an agreement to form a joint venture with Web Werks, to expand its footprint in India. This involves investment of $150 million in next 2 years.
Recently, Adani Enterprises has been allotted over 34,275 sq metre of land in Noida to set up a data centre with an investment of around Rs 2,400 crore.
Further, the telecom industry has been gearing for rolling out the 5G services with three providers starting field trials. The trend of sustainability has been gaining pace as tie-ups for green energy are being inked.