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Crisil Ratings in its latest report has said that the Indian data centre industry’s capacity is set to more than double to 2-2.3 GW by fiscal 2027, attributing to increased digitalisation in the economy. Enterprises are increasingly investing in cloud storage. Further, it stated the rising penetration of Generative Artificial Intelligence (GenAI) is expected to drive the demand over the medium term. The rapid advancement of GenAI, which requires higher computational power and low latency than traditional cloud computing functions, will also provide a tailwind to the data centre demand in India.

It asserted that the industry can expect healthy and stable cash flows, which will keep players’ credit profiles steady. A data centre is typically a large group of networked servers used by organizations for the remote storage or distribution of large amounts of data. Data localization plans are expected to trigger investments in data centres, besides incentives by various states to attract such investments.

Data centres cater to the computing and storage infrastructure demand, which is driven by two primary drivers. One, enterprises are rapidly shifting their businesses to digital platforms, including the cloud, a trend that has accelerated post Covid-19 pandemic. Two, increased accessibility of high-speed data has led to a surge in internet usage, including social media, over-the-top (OTT) platforms and digital payments. Besides, it said mobile data traffic logged a compound annual growth rate (CAGR) of 25 per cent over the last five fiscals. It stood at 24 GB per month at end-fiscal 2024 and is expected to rise to 33-35 GB by fiscal 2026.