India’s data centre sector will need $3.7 billion over the next three years to meet the industry’s requirement for 6 million sq ft greenfield development, a report by global real estate services company JLL has said.
Mumbai and Chennai are expected to drive 73 percent of the sector’s total capacity addition during 2021-23, while cities like Hyderabad and Delhi-National Capital Region will emerge as new hotspots, the report 2020 India Data Center Market Update has said.
“India’s co-location data centre industry witnessed unprecedented absorption of 102 MW during 2020, notching higher absorption than most key markets of Europe and America. Fuelled by longer-term trends of rising cloud adoption, increasing digitalisation and progressive legislation, we anticipate increased demand for co-location space nationwide," said Rachit Mohan, Head, Data Centre Advisory (India), JLL.
Robust expansion by global cloud players in the established markets of Mumbai and Pune continues owing to prevailing infrastructure, while new markets like Hyderabad are gaining momentum.
"Rising demand led data centre operators and developers to pursue ambitious expansion plans, while some adopted the acquisition route to enter Indian markets, which we expect to continue. Colo capacity grew by around 28 percent to reach 447 MW in 2020 from 350 MW in 2019,” he said.
As the data centre landscape continues to evolve, the industry is expected to grow exponentially to reach 1,007 MW by 2023 from 447 MW. With a growing reliance on digital connectivity, demand is likely to ramp up further due to the imminent rollout of 5G, IoT-linked devices, data localisation and cloud adoption.
“India’s data centre industry is expected to add 560 MW during 2021-23 leading to a real estate requirement of 6 mn sq ft. The supply addition will be complemented by densification of racks and servers, sustainable energy sourcing and use of indigenous resources,” said Samantak Das, Chief Economist and Head of Research & REIS (India), JLL.
Various policies and reforms brought by the government to turn India into a “global data hub” had provided necessary measures to achieve this goal, Das said.
The increasing usage of e-commerce, EdTech and digital transactions placed the existing IT infrastructure of enterprises under pressure.
Overall, data usage increased by 36 percent in 2020 due to increased usage of smartphones and fixed wireless access as per Nokia Mobile Broadband India Traffic Index 2021.
According to JLL, the rapid growth of the data centre industry has led to increased energy consumption and environmental impact. Increasingly, global cloud players setting up bases in India aim to reduce their carbon footprint and are looking at data centres that provide sustainable energy alternatives and are entering renewable energy power contracts.
India’s renewable energy capacity at 90 gigawatts accounts for a 25 percent share of the installed power capacity and provides tremendous scope for the development of green data centres.