India’s Data Centre Capacity Set to Double in Three Years: CareEdge Ratings

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    India’s data centre capacity is predicted to double within three years, increasing from 0.9 GW in 2023 to around 2 GW by 2026, as stated by CareEdge Ratings.

    The credit rating and analytics company noted substantial investment opportunities due to the expected capex requirement of Rs 50,000 crore over the next three years.

    The report highlights that India has only three percent of the global data centre capacity despite generating 20 percent of the global data. Mobile data usage in India is also the highest globally.

    Puja Jalan, Associate Director at CareEdge Ratings, mentioned that investment prospects are significant, but challenges related to project execution, land availability, equipment procurement, and managing the vendor ecosystem need to be addressed.

    Additionally, the cost of setting up a data centre per MW has increased to Rs 60-70 crore from Rs 40-45 crore on average.

    The report anticipates data localization to drive investment in data centres, with states offering tax incentives to attract investments.

    CareEdge Ratings noted increased absorption levels from 82 percent in 2019 to 93 percent in 2023, leading to a revenue growth of nearly 25 percent CAGR from FY17 to FY23. Revenue growth is expected to continue, with a projected 32 percent CAGR during FY24–26.

    Maulesh Desai, Director at CareEdge Ratings, expects more players to enter the market, reducing the market share of the top 5 players from 90 percent to 75 percent. The industry is anticipated to witness a capacity addition of 5 GW over 5-6 years.

    Desai emphasized that India’s transition to a developed market economy, along with the digital revolution driven by e-commerce, internet payments, and new technologies like 5G, IoT, and AI, is fueling the growth of data centres. Edge data centres are also expected to increase to meet the demand from tier II and tier III cities for lower latency.

    (Credits: Moneycontrol)

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