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India’s data centre capacity is likely to double in three years, from nearly 0.9 gigawatts (GW) in 2023 to 2 GW in 2026, a report said on Wednesday.

This additional capacity built-up has created substantial investment prospects due to the estimated capex requirement of Rs 50,000 crore in the next three years, according to the report by CareEdge Ratings.

Currently, India has a data centre capacity share of only 3 per cent globally despite generating 20 per cent of the global data, while mobile data usage in India is highest globally when compared with exabytes usage per month.

“The project execution challenges, in terms of land and equipment availability and management of the vendor ecosystem, need to be addressed for the fructification of the planned capacity,” said Puja Jalan, Associate Director, CareEdge Ratings.

Further, the cost per MW of setting up a data centre has also been rising with costs escalating to levels of Rs 60-70 crore per MW from an average per MW cost of Rs 40-Rs 45 crore, Jalan added.

The capacity growth has been complemented by the increased absorption in the country.

The report cited that the absorption levels have gone up from 82 per cent in 2019 to 93 per cent in 2023.

Over the next three to four years, revenue growth is anticipated to continue, with a 32 per cent CAGR growth during FY24-26.

It is anticipated that the EBITDA margins are likely to remain stable in the next three years, said the report.

The industry is expected to see 5 GW capacity addition announcements over 5-6 years.

"Going forward, cost competencies, innovative designs to accommodate scalability and adoption of newer technologies to meet ever-rising energy and cooling requirements are critical success factors for the industry,” said Maulesh Desai, Director, CareEdge Ratings.