Driven by the data boom, digital transformation and local data storage mandates, the data center capacity in India will double from 875MW to around 1800MW by the end of FY 2025, says the CRISIL report. The growth is expected to require an investment of over Rs. 40,000 crores.
The huge demand for data centers in India is driven by the massive spurt in cloud adoption and the requirement for agile digital infrastructure by corporates. The increased demand by individuals for smart devices and the advancement of technologies with the coming of 5G will further boost the requirement for data storage facilities by the end of FY 2023. Another factor aiding this growth trend is the Government norms including data localization, the requirement for sensitive data to be stored within the country, and other digital initiatives.
According to the report, one-third of the Rs. 40,000 crore investment will be used for land acquisition. One-fifth of the amount will be dedicated to substations and the remaining will be for purchasing equipment and fit-outs and civil work. Capital expenditure will be required for captive renewable energy sources also, says the report.
Currently, data centers have become an attractive infrastructure asset class in India. As the data center capacity is set to double by end of FY 2025, Mumbai, which accounts for almost half of the existing data center capacity, is expected to add another 300 MW. Mumbai’s proximity to subsea cables, optic fiber connectivity and availability of skilled manpower will promote the growth of data center industry here. Hyderabad, Chennai, and Pune will be adding a cumulative 400 MW to the data center capacity in India.
Although the data center industry is growing at a fast pace, it remains exposed to technological risks like social engineering, cyberattacks, data theft, and leakages, in spite of high levels of security.