19th January 2023: The Indian data centre market is experiencing robust growth, driven by the country’s overall digitisation, aided by the government’s proactive steps, growing internet usage, and cloud computing. In 2022, India saw an increase in data centre colocation capacity of more than 150 MW, with 60% of the additions taking place in Mumbai, and 30% in Chennai.
As of 2022, the cumulative operational colocation capacity of data centres in the country exceeded 900 MW totalling over 9 million sq. ft gross built up area. This is mainly concentrated in Mumbai, and Chennai due to landing stations for submarine cables that carry internet traffic between countries. The Indian data centre market witnessed transactions of over 500 acres land for data centre developments across the country, of which 45% was in Mumbai followed by Hyderabad at26% and Pune at 14%. The major buyers were still colocation operators (54%) and hyperscalers such as AWS. Microsoft contributed to an extent of 46% for self-build. The key colocation players that acquired land in 2022 across multiple cities include AdaniConnex, NTT, Nxtra, CapitaLand and WebWerks.
Considering the proliferation of internet usage and the advent of 5G, IoT & AI, India’s data centre market is primed for rapid expansion. Savills expects the Indian market to surpass 1 GW capacity in 2023. Around 250 MW of additional data centre capacity is expected to come online, taking the total colocation capacity in India to 1.15 GW. Data suggests that 2 million sq. ft. will be added towards data centre growth. Many states such as Karnataka, Tamil Nadu, Uttar Pradesh, Odisha, Telangana and West Bengal have announced data centre policies in the last two years to facilitate investments, realising the growth potential.
Environmental, social and governance (ESG) measures are at the top agenda of data centre operators with new projects delivered with improved specifications and high quality environmental, health & safety (EHS) standards.
Captive data centres still hold the highest market share,but the colocation service model is witnessing significant growth. Increasingly, factors such as high upfront costs, higher power tariffs, extended development period, limited scalability options, maintenance challenges, security concerns and high real estate costs are making colocation data centres more appealing to operators.
“Given the country’s rich network connectivity, cost advantage, stable government, availability of skilled labourand low climate risk, India is well-positioned to serve as a regional data centre hub in Asia. The Government of India led initiatives such as Digital India, emphasis on self-reliance and data protection through data localisation are expected to increase the volume of data in the country, resulting in an increased demand for data centres and cloud services. We anticipatea demand for around20 million sq. ft. of data centre space across major cities in the next 4-5 years. Going forward the data centre industry’s focus willshift towards being as close as possible to the customer base, including those in Tier-2 citieslike Jaipur, Lucknow, Kochi, Coimbatore etc. This trend will drive demand for real estate in Tier-2 as well as Tier-3 cities in some regions.”.Niraj Karale, Director & Head, Data Centre Services, Savills India.