India's Data Centre Capacity to Surge 2000 MW

Chennai: Rapid expansion of internet usage will lead to increasing data centre capacity to 2000 MW and this requires an investment of Rs 50,000 crore in the next three years.

While India generates about 20 per cent of the global data, its share in data centre capacity is just 3 per cent, implying significant under-penetration of data centre capacity and this is leading the way for large capacity addition plans.

The internet user penetration in India is the lowest whereas mobile data consumption is highest compared to China, the USA and the European Union. The data centre capacity per million internet users in India stood at just 1 MW as against 4 MW per million users in China, 51 MW per million users in the US and 12 MW per million users in the European Union, as per CareEdge data.

Expansion of e-commerce, fintech platforms, online streaming, and gaming services and adoption of technologies such as 5G, IoT, and Artificial Intelligence are also expected to significantly augment demand for data and in turn data centres. Collectively, these demand factors are projected to triple data consumption in India.

The industry witnessed a yearly addition of 100 to 150 MW during the three years from 2020 to 2023 and the capacity reached close to 900 MW. The increased capacity was well complemented by the capacity absorption with the utilization increasing from 82 per cent in 2019 to 93 per cent in 2023.

The industry has entered a growth phase and CareEdge Ratings estimates that capacity is expected to double to around 2000 MW by 2026. The growth plans have also created substantial investment prospects and a capex of Rs 50,000 crore is expected in this space over the next three years till 2026.

Almost 70 per cent of the capex plans are debt-funded and for the large-sized investments, the debt requirement is witnessing higher demand.