Colocation, cloud services build backbone of India's $1 trillion digital economy mission: Report

New Delhi, Sep 29 The colocation and cloud services segment in India is building the backbone of the nation's $1 trillion digital economy mission, a report said on Monday.

Data centres and cloud platforms form the backbone of India’s fast-growing digital economy, which is expected to reach $1,460 billion by the Financial Year 2030 (FY30).

Meanwhile, colocation and cloud can deliver secure, scalable infrastructure powering enterprises, hyperscalers, and government digital growth, Equirus Capital, a full-service investment banking firm, said in its report.

Meanwhile, the foundations of $1 trillion digital economy would be hardware infrastructure, focussing on semiconductors and electronics manufacturing and the data centre and hyperscaler layer, focussing on physical and cloud infrastructure.

Additionally, the foundational model layer, with a focus on AI model development and the application layer, focussing on real-world AI adoption, will play crucial roles.

According to the report, India is poised for significant data centre capacity expansion driven by large investments, yet demand continues to outpace supply.

The capex will likely grow from Rs 175 billion to Rs 575 billion, thereby registering a growth of 23 per cent Compounded Annual Growth Rate (CAGR) from 2024 to 2030.

Despite this high supply of data centres, the demand seems to outpace supply.

In the past year, the supply has risen from 75 megawatt (MW) to 114 MW, almost a 50 per cent addition, then the demand has risen from 81 MW to 122 MW, an increase of over 50 per cent, the report noted.

As per the report, key factors driving growth in India’s data centre and cloud computing market are the explosion of data consumption, enterprise Cloud adoption, policy and regulatory support, and AI and emerging tech workloads.

Adani, Nxtra, and Sify will likely emerge as leading players in the data centre industry.

"More than 1.6GW of capacity to be added to the existing 1.3GW capacity, with Adani Connex, Nxtra and Yotta to add c.860MW of capacity," the report said.

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