Data centre industry in India

India has growing data centre industry. Data centres are used for national security, internet infrastructure, and economic output. As of 2024, India's data centre capacity is at 950 MW, which is expected to be 1800 MW by 2026.^[1] The data centre industry is valued at US$1.2 billion in 2021, a 216% growth from $385 million in 2014. The number of data centres in India is 138, as of March 2022. India ranks 13th globally in terms of highest number of data centres.^[2]

As of 2021, Indian data centres occupy over 8 million sq ft area. 60% of total data centres are in Mumbai, Chennai, Delhi, Bangalore and Hyderabad.^[3]

India's data centre capacity is projected to experience significant growth, doubling from 0.9 GW in 2023 to approximately 2 GW by 2026.^[4] This expansion is driven by the increasing digitization and data localization trends within the country. Despite generating 20% of the global data, India currently holds only a 3% share of global data centre capacity, highlighting substantial under-penetration in this sector. The estimated capital expenditure required for this capacity addition is around Rs 50,000 crore over the next three years. The cost of setting up data centres has also risen, with the average cost per MW increasing from Rs 40-45 crore to Rs 60-70 crore. The absorption levels in the industry have improved from 82% in 2019 to 93% in 2023, with revenue for industry players growing at a CAGR of nearly 25% from FY17 to FY23. CareEdge Ratings projects a 32% CAGR growth in revenue during FY24–26, with stable EBITDA margins expected over the next three years. The industry is also anticipated to see the entry of new players, which will help diversify the market share currently dominated by the top five players. The shift towards edge data centres is expected to meet the growing demand from tier II and tier III cities, ensuring lower latency and better service delivery.