Indian data center industry capacity to double by 2023

Mumbai, 24 August 2021 – India’s data center industry is expected to double capacity by 2023, says JLL. Capacity will exceed 1GW by 2023, driven by strong digitalisation, rising cloud adoption and ambitious growth plans of data center operators, according to a ‘H1 2021 India Data Center Market Update’ released today.

Nationwide, the acceleration of digitalisation has forced enterprises to scale up their IT infrastructure. As a result of digital upgrades, a strong demand for colocation/cloud facilities, which offer scalability, security, and connectivity at lower costs, has been witnessed across India. Additionally, investors and global data center players have increased their commitment during the last six months in the India market by announcing joint ventures to meet expected demand.

“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% of supply addition during the period (H1 2021), indicating robust absorption growth. 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 center industry demand. Furthermore, telecom players are formulating the roll out of 5G which is expected to drive exponential growth in data consumption,” said Rachit Mohan, Head, Data Center Advisory - India: Co-Head, Office Leasing Advisory – Mumbai, JLL.

“Global investors and data center 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 center industry expected to double its capacity and cross the 1GW* mark by 2023. Mumbai which currently accounts for 45% of the total capacity is expected to further add 267MW between now and 2023. Various states have also been providing incentives for data center 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.

Datacenter 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, fibre 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.

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.