Summary:

According to Crisil Ratings, India's data centre sector is set to double its capacity to 2-2.3 GW by FY27, driven by the country's rising digitalisation. The migration of enterprises to cloud storage and the rise of Generative Artificial Intelligence (GenAI), which requires higher processing power, are key drivers of demand. This demand is expected to increase in the medium term. Additionally, data localisation regulations and government incentives are projected to encourage further investment in the industry, fostering growth.

Two major factors are driving data centre demand: rapid digitalisation and increasing internet usage. The Covid-19 pandemic accelerated organisations' shift to cloud services, while high-speed internet access has boosted social media, OTT platforms, and digital payments. Mobile data traffic has grown at a 25% CAGR, reaching 24 GB per month in FY24, with projections to rise to 33-35 GB by FY26. Meeting this demand will require an investment of $6.46-7.64 billion (Rs. 55,000-65,000 crore), primarily for land, buildings, power equipment, and cooling solutions.

Source: IBEF

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