The Current State and Future of Data Center Biz in India

India is witnessing a significant surge in data center projects due to the growing demand for data localisation and cost efficiency. As of the latest available data, India currently has 187 data centers listed across 26 markets. This number reflects the rapid growth of the data center industry in India, catering to the increasing demand for digital services and data localization.

The data center market capacity is projected to surpass ~1,300 MW by the end of 2024. Seeing this growth of Data Center business, the Indian government is actively supporting the growth of the data center industry through various initiatives. The government has proposed regulatory frameworks to create a favorable ecosystem for data centers, which includes setting up Data Centre Economic Zones.

The government's plan is to invest over US$ 1 billion in the next five years as part of a hyper-scale data centre scheme.

The government aims to position India as a global hub for data centers and cloud solutions. To achieve this, the central government has proposed an incentive system has been proposed to stimulate the establishment of data centers.

The finance minister granted infrastructure status to the data center industry in the Budget 2022-23, which is expected to accelerate expansion. Efforts are being made to enable ease of doing data center business, such as tax incentives, subsidies, and streamlined licensing processes.

India is poised for a significant expansion in data center infrastructure, with several noteworthy projects planned for 2024 and beyond. Companies like AdaniConnex, Reliance, Sify, Atlassian, Yotta, and AWS have announced substantial investments in data centers across India.

India's Data Center Market Vs The World

When comparing the data center market size by country, the United States and China are the leading revenue generators globally. In 2024, the revenue in the data center market is projected to reach $340.20 billion worldwide, with the United States expected to generate the most revenue at $99.16 billion. The market is experiencing a compound annual growth rate (CAGR) of 6.56% from 2024 to 2028, indicating steady growth.

India's data center market is also showing significant growth, but it's still developing compared to the US and China. Japan, Germany, and the United Kingdom follow behind the US and China in terms of revenue generation. This reflects the strategic importance of these regions in the global data center market and their respective digital economies.

Tier 2 Expansion: There's an emergence of co-location and edge computing facilities, with edge data centers expanding into Tier 2 cities in 2024.

Cities with Most Number of Data Centers

The concentration of data centers remains prominent in cities like Mumbai-Navi Mumbai, Chennai, Delhi-NCR, Bengaluru, Pune, Hyderabad, and Kolkata.

1. Bangalore: Known as India's tech hub, Bangalore boasts 29 data centers. Its thriving IT ecosystem attracts companies seeking reliable infrastructure.

2. Mumbai: As the country's largest city, Mumbai leads the way with 28 data centers. Its strategic west coast location ensures excellent connectivity via multiple submarine cables to Europe and Southeast Asia.

3. New Delhi: The capital city hosts 18 data centers, serving various industries and services.

4. Chennai: With 17 data centers, Chennai plays a vital role in supporting India's digital infrastructure.

5. Pune: The city has 14 data center facilities with 162,183 sqft and 38 megawatts. The top providers in Pune are Nxtra Data Ltd (3 sites) and AdaniConneX with 1 facility. The most popular facilities are STT Pune 1 and STT Pune 1.

6. Hyderabad: Hosting 12 data centers, Hyderabad plays a crucial role in providing essential services for businesses and organizations.

7. Navi Mumbai : A planned city next to Mumbai currently has 11 data centers. Google is in advanced negotiations to purchase a 22.5-acre land parcel in Navi Mumbai, for its first captive data center in India.

8. Noida: Located near Delhi, Noida houses 9 data centers, contributing significantly to India's data center landscape.

9. Kolkata : Kolkata, a key digital hub in the eastern India, has 8 data centers facilities.

10. Ahmedabad : The city in Gujarat has 7 data centers.

Other cities like Gurgaon (3)Coimbatore (3), Madurai (1) and Ludhiana / Panchkula also have data centers, albeit in smaller numbers.

Kochi, with 6 data centers, is situated along the southern coast, is connected to multiple submarine cables, making it an attractive location for co-location data centers.

Upcoming Projects

AWS: Amazon Web Services (AWS) has announced a massive investment plan of $12.7 billion to expand its data centers in India. AWS has plans to create four smaller data centers across India over the next two years, located in Bangalore, Chennai, Delhi, and Kolkata.

Adani Group: Adani Enterprises Limited (AEL) is investing over Rs 5,000 crore in Telangana for a 100 MW data centre, over the coming 5-7 years. Adani portfolio of companies also signed an MoU for investment of over ₹42,700 crore for various projects in the state of Tamil Nadu

AdaniConnex: A joint venture between Adani Group and EdgeConneX, AdaniConnex is aiming to develop a network of hyperscale data centers across India, focusing on markets like Chennai, Navi Mumbai, Noida, Vizag, and Hyderabad. The JV plans to build 1 GW of data center capacity over the next decade, with a commitment to powering these facilities with 100% renewable energy. 

Yotta: Backed by the Hiranandani Group, Yotta Data Services is expanding its operations in Greater Noida and Guwahati, with plans to complete new facilities by the end of 2024.

Google: Google is also among the big players investing in the data center market in India. The search giant is planning 8-storey data center in Navi Mumbai, by 2025. Additionally, Google, for it first captive data center, is in advanced negotiations to acquire a 22.5-acre land parcel in Juinagar, Navi Mumbai.

NTT : The company plans to invest RS 2,000 crore ($241.5m) over the next few years in the Kolkata data campus of NTT Global Data Centers (NTT GDC) at the Bengal Silicon Valley Tech Hub. The NTT GDC campus will be home to 3 data centers, the 1st of which will spread over 100,000 sq ft and have a capacity of 9MW facility load and 6MW IT load. The facility should be up and running in the next 12 to 15 months.

Kotak Alternate Assets: Kotak's Data Center Fund by Kotak Alternate Assets, which is managed by Kotak Investment Advisors, is set to invest a whopping $800 million in the development of 5-7 large data center assets across key property markets in India. This ambitious initiative reflects their commitment to enhancing data infrastructure in the country.

CtrlS Datacenters: Aiming to increase their number of data centers significantly by 2024–25.

Digital Connexion, STT GDC India, CapitaLand India, Equinix: These companies are also among those with major data center projects planned in India.

The above mentioned projects reflect India's growing importance as a data center hub, driven by the demand for data localization and the digital transformation of businesses.

These investments also signify the strategic importance of India in the global data center market and the country's growing digital economy.

The Future

India's vast landmass, skilled IT workforce, and growing demand for digital services position it as a key player in the global data center market. As the country continues to expand its digital footprint, more data centers are likely to emerge, supporting businesses, cloud services, and connectivity needs.

The future of data centers in India looks very promising. With the country accounting for a significant portion of global internet users, there's a substantial growth potential for data center capacity. The industry is expected to grow at a compound annual growth rate (CAGR) of between 10-25% over the next five years. This growth is driven by the digital transformation of India, the increasing demand for cloud services, and the need for secure and scalable data storage solutions.

India's unique digital infrastructures like CoWIN, ONDC, Aadhaar, and UPI are creating a need for robust data centers. The government's Digital India campaign and initiatives like BharatNet are further accelerating this need by increasing internet access and generating massive amounts of data. With both global and domestic companies investing in the sector, India is fast emerging as a data center hub.

The data center industry's expansion is also fueled by the digitization of enterprises, the development of smart factories, and the growing consumption of digital services by the young population. As such, the data center market in India is not only expanding rapidly but also becoming an attractive investment opportunity for industry leaders.

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