India's data centre industry to attract an investment of USD 5.7 billion by 2026
amid the growing demand for AI (Artificial
Intelligence), says a report by real estate and investment management
company, JLL.
The report highlights that
India's data
centre industry will add 791 MW capacity by 2026 and this expansion
will lead to a demand of 10 million sq. ft of real state space.
"The Data
Centre (DC) industry in India is set to witness remarkable
growth, with projections of adding 791 MW capacity by 2026. This expansion will
drive demand for 10 million sq. ft. of real estate space, attracting
investments worth USD 5.7 billion" said the report.
A data center is a facility that centralises an
organisation's IT operations and equipment to store, process and transfer data
and applications.
The report highlights that growth
in computing power and the resulting new applications are expected to drive
strong demand for DC industry over the medium term. The expected demand of the
Indian data centre industry to reach 650-800 MW during 2024-26.
The surge in demand for data centres is primarily
fuelled by the increasing adoption of Artificial Intelligence (AI).
The report points out that Cloud
Service Providers (CSPs), who essentially offer IT infrastructure systems
primarily for data storage and computing power accessible through the Internet,
have realigned their requirements to factor in AI-led demand. The CSPs have
also announced higher investments to scale up AI-led growth.
"The exponential growth in processing power
and data volumes, driven by AI, necessitates the development of new data
centres capable of meeting energy, processing, and cooling needs. The
anticipated expansion and progression of diverse AI disciplines are projected
to create additional demand for data centres, expanding their capacity
requirements and advancing their capabilities" said Rachit Mohan, Head, Data Centre Advisory,
India, JLL. According to the report in the second half of
2023, there was a 12 per cent increase in absorption to 81 MW compared to 72 MW
during the same period last year. This growth can be attributed to cloud
service providers (CSP) gaining momentum after a brief hiatus during the first
half of 2023. In Mumbai, absorption nearly doubled during this period as CSPs
renewed their pace of absorption.
"India is poised to be the third-largest
economy, with a projected USD 5 trillion GDP by 2027 with digital economy
contribution of around 20 per cent. This digital expansion is anticipated to
propel the growth of India's data centre industry, projected to increase from
853 MW in 2023 to 1,645 MW by 2026," said Dr. Samantak Das, Chief Economist and Head of
Research & REIS, India, JLL. There was a lower supply addition of 75 MW during
H2 2023 as the available supply from the first half was utilised to meet the
demand, resulting in tighter vacancy levels of 5.5 per cent.
With a large user market, talented workforce, and
thriving startup ecosystem, India presents a significant opportunity to emerge
as a global data hub, driven by sustainable practices.
The country's DC sector expanded
from 350 MW in 2019 to 854 MW in 2023, in line with the increasing digital
usage trends.
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