India Data Centres Capacity Doubled, $21bn Investment in H1

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During the first half of 2023, the DC sector attracted investment commitments worth USD 21 billion.

India’s DC capacity has impressively doubled from 2020 to 2023, reaching around 880 MW by mid-2023, with an expectation to increase to approximately 1,048 MW by the end of 2023. The Data Center (DC) industry in India is experiencing a significant growth trend due to rapid digitalization, improved technological infrastructure, and the incorporation of advanced technologies like 5G, AI, blockchain, and cloud computing. The nation’s evolving digital infrastructure, increasing technology use, and proactive regulatory support have made India an attractive hub for DC investments. 

Several Indian states are actively encouraging DC investments through specific policies and incentives, recognizing DCs as essential services for uninterrupted operations, according to CBRE report. States like Maharashtra, Telangana, and Tamil Nadu have been early adopters of state-specific incentives for the sector, with other states following suit to attract DC investments through extensive incentives and infrastructure support.

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Mumbai, Chennai, Bangalore, and Delhi-NCR are India’s major tier-I DC markets, accounting for about 87% of the nation’s DC stock as of mid-2023. Mumbai is the leading DC market in India, housing more than half of the total stock, favoured by its multiple cable landing stations, government initiatives, and strong finance and entertainment industries.

The diverse occupier base in India, including technology, fintech, healthcare, education, and media companies, drives robust demand for DCs. Public sector undertakings and other government entities are also transitioning to third-party colocation DCs. As a result, DC occupancy levels in India stood at approximately 75-80% in the first half of 2023, with expectations of further improvement by year-end.

During the first half of 2023, the sector attracted investment commitments worth USD 21 billion, with hyperscale DCs dominating (89%) most investments. Key states like Maharashtra, Tamil Nadu, West Bengal, and Uttar Pradesh have been significant in securing these investments.

The DC industry’s growth is expected to continue in 2023-24, with nearly 500 MW currently under construction across various cities. Mumbai, followed by Chennai and Delhi-NCR, are expected to lead supply additions during this period. While tier-I cities are witnessing DC industry expansion, leading hyperscalers and cloud service providers are also exploring emerging markets such as Kochi, Jaipur, Ahmedabad, Lucknow, Patna, and Vishakhapatnam.

Overall, India’s burgeoning population, increased technology use, social media and online streaming platforms, and rapidly improving digital infrastructure will continue to boost DC demand. This positions India as a key hub for DC development in the Asia-Pacific region over the next decade. Investors are showing heightened interest in DCs as an alternate investment option, with a focus on technology firms, BFSI companies, cloud services, and OTT platforms driving demand for both colocation and hyperscale DC facilities.

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