New Delhi [India], August 29 : The data centre industry in India is on the cusp of a transformation driven by advancements in Artificial Intelligence (AI) and the rollout of 5G technologies, according to a report by Avendus, a leading financial service provider firm.
This shift is being fuelled by a surge in demand for high-performance computing infrastructure, including the deployment of high-end GPU servers and AI-centric cloud solutions.
The Indian data centre sector is experiencing unprecedented growth driven by AI-led demand. Currently, India hosts approximately 1,300 AI companies, with AI expected to significantly increase the need for high-density server racks, ranging from 5 to 50 kW.
The demand for data centres is accelerating because of companies adopting cloud services, higher uses of AI services, requirements for data localization, roll out of 5G and increased bandwidth services, an explosion in data creation and consumption, and business continuity and backup plans of enterprises.
This increase in server density will also drive higher cooling requirements. The generative AI market in India is projected to grow at a compound annual growth rate (CAGR) of 28 per cent from 2023 to 2030, translating into strong demand for data centres.
Over the next four years, the anticipated demand for AI-enabled data centres in India is estimated at around 500 megawatts (MW). This surge is attributed to the rapid expansion of digital services and the growing need for low-latency data usage across various sectors.
India's current installed data centre capacity stands at a mere 1,011 MW, with approximately 94 per cent located in seven major cities. Mumbai and Chennai are leading the charge, thanks to their well-established infrastructure networks.
Mumbai, accounts for 48 per cent of the total data centre capacity in India, benefiting from its submarine landing stations, reliable power, and dense fibre infrastructure. The city is expected to see over 35 per cent of the total additional capacity in the next five years.
Chennai is also witnessing substantial demand due to its similar infrastructure advantages and the recent landing of the MIST cable, which is likely to attract additional demand from the Asia-Pacific (APAC) region.
Delhi and Kolkata are key players in North and East India, respectively, with Delhi projected to contribute around 15 per cent of the incremental capacity.
The Avendus report says the Indian data centre industry is maturing with increased long-term stable capital inflows, driven by digitization and data localization trends.
Developers have a pipeline of over 3 gigawatts (GW) set to be delivered over the next decade. This requires an estimated capital expenditure of approximately USD 25 billion a great opportunity for investors.
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