Data centre capacities in India to rise six-fold in next six years: Icra

With investments worth Rs 1.5 trillion in the pipeline, the data centre (DC) capacity in India is expected to jump six-fold by 2028, rating agency Icra said on Tuesday. Mumbai, Hyderabad and the National Capital Region (NCR) will account for 70-75 per cent of the installed DC capacity.

The agency said that corporations like the Hiranandani Group, the Adani Group, the Reliance Group and foreign investors like Blackstone, CapitaLand, and Princeton Digital Group have started investing in the DCs. Along with these, captive consumers like Amazon and Microsoft are also investing in this field. The DC capacity is expected to rise to 4,900-5,000 MW by 2028.

"ICRA expects the sector to witness a six-fold increase in capacities in the next six years, with Mumbai, Hyderabad and NCR to account for 70-75 per cent of the installed DC capacity. The presence of landing stations, fibre connectivity, uninterrupted power supply, proximity to tenant's headquarters and a high score on disaster proofing are some of the key parameters a DC operator would look for in a location. Mumbai and Chennai have maximum landing stations, with the former being the preferred location for a DC operator," said Anupama Reddy, vice president and co-group head of corporate ratings at ICRA.

The main reasons for the rise are expanding digital infrastructure in India as well as favourable regulatory policies.

"The key triggers for the digital explosion in India are the increasing internet and mobile penetration, the Government's thrust on e-governance/digital India, adoption of new technologies (cloud computing, IoT, 5G etc), growing user base for social media, gaming, e-commerce and OTT platforms. This, coupled with favourable regulatory policies viz. the draft Digital Data Protection Bill 2022, providing infrastructure status to data centres, special incentives from Central and state governments like land at a subsidised cost, power subsidies, exemptions on stamp duty, discounts on the usage of renewable energy and procurement of IT components made locally, and other concessions are expected to boost DC investments in the country," Reddy added.

The report said that the industry revenues are expected to increase at a compound growth rate of around 17-19 per cent between 2022-23 and 2024-25. Between 2017-18 and 2021-22, this rate was 24.5 per cent. Despite the fall in growth rate, the operating margins are expected to improve in the next three years, ICRA said.