New Delhi [India], December 23 : The Indian data centre industry's capacity is set to more than double to 2-2.3 GW by fiscal 2027, Crisil Ratings asserted on Monday, attributing to increased digitalisation in the economy. Enterprises are increasingly investing in cloud storage.
Further, according to the rating agency, the rising penetration of Generative Artificial Intelligence (GenAI) is expected to drive the demand over the medium term. The rapid advancement of GenAI, which requires higher computational power and low latency than traditional cloud computing functions, will also provide a tailwind to the data centre demand in India.
The rating agency asserted that the industry can expect healthy and stable cash flows, which will keep players' credit profiles steady.
A data centre is typically a large group of networked servers used by organizations for the remote storage or distribution of large amounts of data. Data localization plans are expected to trigger investments in data centres, besides incentives by various states to attract such investments.
Data centres cater to the computing and storage infrastructure demand, which is driven by two primary drivers.
One, enterprises are rapidly shifting their businesses to digital platforms, including the cloud, a trend that has accelerated post Covid-19 pandemic.
Two, increased accessibility of high-speed data has led to a surge in internet usage, including social media, over-the-top (OTT) platforms and digital payments.
Mobile data traffic logged a compound annual growth rate (CAGR) of 25 per cent, as per Crisil, over the last five fiscals. It stood at 24 GB per month at end-fiscal 2024 and is expected to rise to 33-35 GB by fiscal 2026.
"To meet the growing data centre demand, an investment of Rs 55,000-65,000 crore is required over the next three fiscals, primarily towards land and building, power equipment and cooling solutions. Data centre operators typically build infrastructure - land and building, which account for 25-30 per cent of overall capex - with the expectation of future tie-ups," said Manish Gupta, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings.
The capacity additions are driven by expansion plans of the existing players as well as entry of new players. These are on the back of significant demand from hyperscalers. As per definition, hyperscalers are large-scale data centres that provide cloud computing and data solutions for businesses with large digital infrastructure needs.
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