Key Points
India generates 20% global data but has only 5.5% capacity
Strategic location between Middle East and Southeast Asia
38% YoY growth to 1.35 GW capacity
$20bn investment needed by 2030
The financial advisory firm also asserted that India's strategic location between the Middle East and Southeast Asia gives the country an edge in this domain.
Data centre demand in India is, unequivocally, rising, said the report published by JM Financial this week.
"Factors fuelling the uptrend are both structural and cyclical. A large internet user base generating trove of data, the government's data localisation push and AI are some of the structural tailwinds," the JM Financial report asserted.
Even though India's data centre business is growing, it has a disproportionately lower share of data centres.
JM Financial said India even though India generates 20 per cent of global data, it has only 5.5 per cent of global data centre capacity - and slower-than-desired capacity addition.
These, the report said, have steepened the demand-supply mismatch, ushering in a cyclical boom in capacity expansion
India's co-location data centre capacity as of 2024 stands at 1.35 GW, up 38 per cent year-on-year. Despite this, India's data centre density is one of the lowest in the world.
"We estimate that India needs a total capacity of 5 GW by 2030, just to reach 50 per cent of China's DC density," the report said.
This aligns with the current announced under-construction as well as planned capacity of 3.3 GW by 2028.
The report anticipates huge capital spending in data centres in the years ahead.
"While a majority of the cloud infrastructure spend will be done by hyperscalers, in our view, capex towards data centre capacity (USD 20bn) alone could entail equity issuance of USD 10bn," it said.
Still, these will merely serve India's domestic demand, it noted. Given the opportunity in this emerging sector, JM Financial anticipates more companies coming up with their stock market listings over the next 5 years.
"Given the capital-intensive nature of the segment, we anticipate that many of the domestic operators will list to gain access to capital. The initial investment opportunity could be concentrated in the upstream value-chain...Investors will have their hands full."
A data centre is a physical facility that organizations use to house their critical applications and data.
A data centre's design is based on a network of computing and storage resources that enable the delivery of shared applications and data. The key components of a data centre design include routers, switches, firewalls, storage systems, and servers, among others.
Comments:
Rahul K.
This is huge for our tech sector! India's digital transformation is accelerating faster than anyone predicted. The job creation potential alone makes this exciting.
Priya M.
While promising, I worry about power consumption and environmental impact. Data centers need massive electricity - hope renewable energy keeps pace with this growth 🌱
Amit S.
Finally! Our infrastructure is getting global recognition. The strategic location advantage is something we've underutilized for decades. This could be our next IT revolution.
Neha P.
Interesting report but I'm skeptical about execution. We've seen many "potential" sectors fail to deliver. Will the government provide enough policy support this time?
Sanjay V.
As someone in cloud computing, this validates what we've been seeing on ground. The hyperscalers are already making big moves here. Exciting times ahead! 🚀
