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India’s data centre operational capacity is projected to more than double to 2,000-2,100 MW by FY27 from 950 MW in FY24, involving an investment in the range of Rs 50,000-Rs 55,000 crore, a report said on Tuesday. 

The data centre capacity in India is dominated by a few players like NTT Global Data Centers, STT Global Data Centers, CtrlS Data Centres, Sify Technologies and Nxtra Data Limited, which had a share of 85 per cent in the operational capacity (as of March 2024).

However, considering the strong demand for data centres in the country, many new developers like Yotta, Digital Connexion, Lumina CloudInfra, CapitaLand, Digital Edge, etc., have entered the industry with massive investments, said the report by credit rating ICRA.

“The low data tariff plans, access to affordable smartphones, adoption of new technologies and growing user base of social media, e-commerce, gaming and OTT platforms are some of the key triggers for data explosion,” said Anupama Reddy, VP and Co-Group Head-Corporate Ratings, ICRA.

Also, artificial intelligence (AI)-led demand, which is expected to increase multi-fold in the next 3-5 years, presents significant opportunities.

“This, coupled with favourable regulatory policies from the central and state governments, the draft Digital Personal Data Protection Bill, and the infrastructure status are supporting the DC growth prospects,” Reddy added.

Co-location services, backed by hyperscalers, contribute to the majority (80-85 per cent) of the DC revenues in the country.

Around 95 per cent of the existing capacity is in six cities in India, with Mumbai and Chennai leading the race due to their inherent advantage in the form of the dense wet cable ecosystem, which offers best latencies (amount of time it takes for a data to travel from one place to another).

According to the report, given the ESG considerations for most of the key tenants, DC players are also expected to invest in green power to meet their power requirements.

Green power, as a percentage of total power consumption, is around 75 per cent for the top three global DC operators.

“However, as a percentage of total power consumption, it is currently below 5 per cent for Indian DC players, though this is projected to increase to 20-25 per cent by 2028,” said the report.