Report Overview

Booming Digital India trends and the government’s supportive initiatives for digital transformation across the country are expected to drive the India Data Center Market during the forecast period between 2024 and 2030.

India Data Center Market – Industry Trends & Forecast Report, 2030

The India Data Center Market size was estimated at USD 4.37 billion in 2023. During the forecast period between 2024 and 2030, the India Data Center Market size is projected to grow at a CAGR of 7.18% reaching a value of USD 7.66 billion by 2030. Prominent drivers of the market are increasing internet penetration, growth in digital data traffic, rising public cloud services, and expanding internet of things (IoT). This persistent upward trend is fueled by the country's expanding digital infrastructure, driven by the increasing use of digital services and the need for data storage and processing capabilities. Additionally, proactive regulatory measures by the Indian government focusing on data localization, privacy, and security have further stimulated growth in the market. The influx of investment commitments, totaling approximately USD 35 billion between 2018 and 2023, from both global and domestic investors underscores the attractiveness of the Indian data center market. Moreover, with nearly 500 MW of data center capacity under construction across multiple cities in India, the data center segment is poised for continued accelerated growth during the forecast period.

Data Center – Overview

A data center is a facility used to house computer systems, servers, networking equipment, storage systems, and other related components for the purpose of collecting, storing, processing, and distributing large amounts of data and information. These facilities are equipped with infrastructure such as power supplies, cooling systems, fire suppression mechanisms, and security measures to ensure the reliable operation and protection of the equipment and data housed within them. Data centers are essential for supporting the operations of businesses, organizations, and governments by providing the necessary computing resources for applications, databases, websites, and other digital services. They come in various sizes and configurations, ranging from small server rooms to large-scale facilities spanning thousands of square meters, and can be operated by companies internally or outsourced to third-party service providers.

India Data Center Market

Growth Drivers

Growing Government Initiative

In fostering India's data center sector, government initiatives play a pivotal role. With a thriving digital economy and burgeoning internet accessibility, the government prioritizes stable infrastructure for uninterrupted internet access, data security, and cloud computing. Various incentives and regulatory frameworks have been introduced to encourage investments and ensure compliance. Noteworthy measures include the incorporation of data centers under essential services, the establishment of Data Centre Facilitation Units (DCFU), creation of Data Centre Economic Zones, and special categorization codes under national building regulations. Such initiatives aim to propel the growth of India's data center market, bolstering its position as a key player in the global digital landscape.

Burgeoning Digital India

The burgeoning growth of telecom giants such as Jio has democratized access to smartphones and internet services, catalyzing the expansion of the data center market. Moreover, initiatives like the "Make in India" movement have incentivized the local smartphone industry, resulting in the production of affordable yet technologically advanced devices. With the impending launch of the 5G network, India anticipates a surge in data consumption, fueled by a burgeoning appetite for online content and services. Concurrently, the transition from copper-based to fiber optic internet connections reflects India's commitment to enhancing digital infrastructure. As broadband connectivity proliferates, supported by initiatives like the BharatNet project, India's digital landscape evolves, paving the way for increased reliance on data centers to support this digital revolution.

Challenges

Volatile Availability of Electric Power

Power issues, including unreliable electricity supply and high costs, pose significant constraints to the growth of the India Data Center Market. Inadequate power infrastructure can lead to frequent outages, compromising the uninterrupted operation of data centers and potentially causing data loss or service disruptions. Additionally, the high costs associated with backup power solutions such as generators and uninterruptible power supply (UPS) systems further strain the financial viability of data center operations. Addressing these power challenges through investments in infrastructure and sustainable energy solutions is essential to unlock the full potential of India's data center market.

Impact of Escalating Geopolitical Tensions on India Data Center Market

Geopolitical tensions can have a multifaceted impact on the India Data Center Market, potentially leading to increased uncertainty and risk for investors and operators. Heightened geopolitical tensions may disrupt international trade and investment flows, impacting the availability of critical infrastructure components and technologies essential for data center operations. Moreover, geopolitical instability can exacerbate regulatory challenges and introduce geopolitical risk factors that influence decision-making processes for market participants. To mitigate these impacts, stakeholders may need to enhance risk management strategies, diversify supply chains, and prioritize investments in robust, resilient infrastructure to safeguard the continuity and security of India's data center market amidst geopolitical uncertainties.

India Data Center Market

Segmental Coverage

India Data Center Market – By Service Model

By service model, the India Data Center Market is bifurcated into Co-location and Managed Services segments. The co-location segment holds a higher share in the India Data Center Market by service model. Constructing a data center entails significant costs and lengthy approval processes, making renting from a colocation provider a quicker and more cost-effective option for businesses needing increased capacity swiftly. Notably, colocation facilities offer skilled management, ensuring efficient 24x7 operation, a challenge for many businesses operating with limited staffing. Also, adherence to stringent regulatory standards is simplified through colocation providers, who already possess industry-recognized certifications. Another driving factor is the colocation facilities typically exhibit more sustainable development practices compared to single extensive infrastructures, making them environmentally friendly choices. These factors collectively position colocation as the preferred choice for organizations seeking scalable, secure, and available resources without the hefty investment and management required for individual data centers.

India Data Center Market – By Tier Classification

Based on tier classification, the India Data Center Market is bifurcated into Tier 1, Tier 2, Tier 3, and Tier 4 segments. The tier 4 segment is expected to hold the highest share in the India Data Center Market by tier classification during the forecast period. It is primarily due to its unparalleled reliability and robustness. As an enterprise-class tier, Tier 4 data centers boast redundant and dual-powered instances of critical infrastructure components like servers, storage, and network links, ensuring 99.995% availability with minimal downtime. Notably, Tier 4 data centers offer fault-tolerant functionality, mitigating the impact of unplanned failures on critical operations. This level of resilience, coupled with multiple distribution paths, safeguards against disruptions, making Tier 4 data centers the preferred choice for corporations seeking the highest levels of reliability, security, and availability for their data infrastructure.

India Data Center Market – By Region

Geographically, the India Data Center Market is divided into North India, South India, East India, and West India regions. The West India region holds the highest share in the India Data Center Market and is expected to maintain its dominance throughout the forecast period. The preeminence stems from Mumbai's strategic significance as the nation's financial capital and a major commercial and transport hub. The city boasts robust infrastructure, including reliable power, extensive fiber connectivity, and critical cable landing stations, making it an ideal location for data centers. Notably, Mumbai's connectivity to global destinations – the Middle East, Europe, Africa, and Hong Kong – is facilitated by subsea cable landing stations. This ensures low-latency connections and dependable cross-border data transmission. Mumbai's data center boom is undeniable. The city houses nearly half of all data centers in India, attracting investments from leading national and international players. The city's surrounding areas, including Thane, Bhiwandi, and Navi Mumbai, have also experienced growth in this sector, fueled by favorable government policies and incentives promoting Mumbai and Navi Mumbai as data center hubs. Consequently, the Mumbai data center market is forecast to witness significant growth, reaching a projected capacity of 1,491.38 MW by 2029.

Competitive Landscape                             

Major players operating in India Data Center Market include Cyfuture India Pvt. Ltd, Tata Communications Ltd, Sify technologies Ltd, Netmagic Solutions Pvt Ltd, Equinix Inc., NTT Ltd, Nxtra Data Ltd, STT CDG Pte Ltd, AdaniConnex, and CtrlS Datacenters. To further enhance their market share, these companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches.

Recent Developments

• In February 2024 - CtrlS Datacenters announced that it was constructing a new data center campus in Chennai, India. With an investment of INR 4,000 crore (approximately USD 482.5 million), the project aims to provide 72MW of power across two buildings spanning 1 million sq ft.

• In October 2023 - Black Box, a US-based IT solutions firm, ventured into India's digital infrastructure and data center integration sector to meet growing client demands.

Scope of the Report

By Service Model

• Co-location

• Managed Services

By Tier Classification

• Tier 1

• Tier 2

• Tier 3

• Tier 4

By Region

• North India

• South India

• East India

• West India