India’s Digital Transformation Fuels Data Centre Demand

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The Indian data centre market is witnessing unprecedented growth and it is projected to expand at a compound annual growth rate (CAGR) of 21% by 2030. The rise is basically fueled by adoption of technologies such as cloud computing, Artificial Intelligence (AI), the Internet of Things (IoT) and big data at a rapid pace. The rise in e-commerce and digital transformation initiatives are also believed to contribute to the demand.

India absorbed 407 MW of IT capacity in 2024 and it was equipped with 191 MW of new capacity across major cities. The growth is largely driven by hyperscalers, the BFSI (Banking, Financial Services, and Insurance) sector, IT services and a couple more such industries that depend on data centre operators for colocation as well as related services. Moreover, over 200 acres of land were acquired in key cities like Mumbai, Hyderabad, Pune, Chennai and Bengaluru to support expansion efforts in 2024.

India is quickly emerging as a global hub for data centres and it is added by the growing penetration of 5G as well as increase in the use of mobile applications. Tier-I cities such as Mumbai, Hyderabad, Chennai and Pune have continued to dominate the space while a notable rise in demand for edge data centres were also noticed in Tier-II and Tier-III cities such as Bhubaneswar, Patna, Lucknow, Jaipur, Kochi and Coimbatore. The smaller cities are becoming critical in catering to localized data needs and this further is driving the market growth.

The demand for data centres is expected to exceed 450 MW IT capacity in 2025. The supply additions are likely to reach 600 MW during the same period. India’s total data centre capacity is projected to reach 3,400 MW IT across major cities.

Mumbai led the absorption market in 2024 and it accounted for 53% of the total absorption. Hyderabad follows with 14% while Chennai and Pune with 10% each. The operational capacity of data centres in India currently stands at 1,110 MW IT. This reflects a remarkable CAGR of 22% since 2014. Hyperscalers utilize 22% of the capacity and enterprises account for 10%. The rest is shared by a mix of both.

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