India’s Data Centre Industry

What is the tipping point for India’s data centre industry?

India’s 578 million mobile phone data users have been driving the large data usage which has been served by data centres across the globe. But the issue of right to privacy and data protection is being widely discussed leading to data protection laws. In fact the data localisation laws are expected to be the tipping point for growth of Indian Data Centre industry. The report looks at the provisions of the draft laws and its implications.

How has the India’s data centre industry grown in last five year and what are the factors driving it?

Increasing usage of internet was driven by lowered costs and improved data access during the last five years. This led to the underlying growth of data storage. The continuous technology upgradation and complexity, as discussed earlier, led to the shift from captive data centres to outsourced or third-party data centres.

Robust revenue growth of 22% CAGR during 2013-14 to 2018-19

Note: Revenue trends of 6 large players were compiled and assumed to represent 80% of the total market Source: MCA and company annual reports

What is the investment potential of this emerging sector?

The Indian data centre industry has seen early interest by private equity players in supporting new entrants. The early movers have scaled up their operation as the demand for data centres grew in India. Global players have adopted acquisition routes to establish their foothold in the growing industry in India, as seen from the two major acquisitions in this space.

The Indian data centre sector is expected to see 431 MW (IT power load) capacity additions during 2020-24. This would require a total design power capacity addition of ~713 MW. Based on the industry benchmark of USD 4 million per MW, this would require an investment of USD 4.6 billion over the next five years. This investment excludes land costs, which differ across locations.

118% capacity addition expected in next five years over existing capacity of 350 MW

Source: JLL Research estimates & secondary sources

Data centres, as the backbone of the country’s new digital revolution, are here to stay and will see a much stronger phase of growth in the years to come. For insights, read the full report below.

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