Crisil Report: India’s Data Center Capacity to More Than Double by FY27
According to a report by Crisil, India’s data center capacity is set to more than double by FY27, reaching 2 to 2.3 gigawatts. This surge is driven by the growing digitization of the economy, with businesses increasingly investing in cloud storage. The report highlights that the demand for data centers will continue to rise, particularly due to the rise of generative artificial intelligence (GenAI) and data localization initiatives.
Data centers are large clusters of networked servers used for remote data storage and distribution. Crisil predicts that the expanding use of cloud storage and the introduction of data localization policies will significantly boost investment in data centers. Additionally, the penetration of generative AI, which requires more computing power and lower latency than traditional cloud tasks, is expected to drive further demand for data centers in India.
The need for data centers is fueled by two key factors:
- The rapid shift of businesses to digital platforms, including the cloud, which accelerated after the COVID-19 pandemic.
- Increased internet usage, driven by access to high-speed data, particularly in areas like social media, over-the-top (OTT) platforms, and digital payments.
Mobile data traffic has grown at a compound annual growth rate (CAGR) of 25% over the past five fiscal years, as per Crisil. Data usage was 24 GB per month at the end of FY24 and is projected to rise to 33-35 GB by FY26.
Manish Gupta, Senior Director and Deputy Chief Rating Officer at Crisil Ratings, stated, “To meet the growing demand for data centers, an investment of Rs 55,000-65,000 crore is needed over the next three fiscal years. This investment will primarily be directed towards land, buildings, power equipment, and cooling solutions. Data center operators typically allocate 25-30% of the total capital expenditure for infrastructure like land and buildings.”
