India's Data Centre Industry Set for 604 MW Expansion, Boosted by AI and 5G
The expansion will require 7.3 million square feet of real estate and 3.8 billion USD in capital. Mumbai will maintain its leadership, while Chennai is also set to see significant growth.
Data CentreExpansionAi5gReal EstateReal Estate MumbaiNov 27, 2024
India's data centre industry has been on a rapid growth trajectory in recent years. By mid-2024, the industry had reached a total capacity of 917 MW, with a high occupancy rate of 873 MW, indicating strong demand. Since 2019, the sector has grown 2.5 times, achieving a compound annual growth rate (CAGR) of 24%. This rapid expansion is primarily driven by key government initiatives, such as an investment of 1.24 billion USD in AI infrastructure, and the widespread rollout of 5G, which reached over 90% of the population by the end of 2023.
The industry is now gearing up for the next wave of expansion. Between 2024 and 2026, the data centre sector is projected to require 7.3 million square feet of real estate and 3.8 billion USD in capital investment. Mumbai is expected to retain its position as the leading market, with significant growth also anticipated in Chennai and other regions.
Dr. Samantak Das, Chief Economist and Head of Research at JLL India, emphasized the broader impacts of this growth, stating that it will not only demand specialized skills but also create opportunities in industries linked to data centre operations.
Despite its rapid growth, the industry is currently operating under tight conditions, as reflected by the near-full occupancy rate in mid-2024. The addition of 604 MW in capacity is aimed at easing this pressure and meeting the rising demand driven by technological advancements and digital transformation.
The expansion of the data centre industry is creating a wide range of opportunities. It is generating employment in specialized fields, spurring innovation across various sectors, and boosting industries that supply critical infrastructure. The development is further enhancing India's digital capabilities and solidifying its position as a global technology hub.
As India continues to invest in AI and expand 5G coverage, the data centre industry is poised to play a critical role in supporting the country's digital ambitions. With an increasing focus on advanced technologies and infrastructure, India is positioning itself as a leader in the global tech landscape.
Frequently Asked Questions
What is the expected capacity addition for India's data centre industry between 2024 and 2026?
The industry is expected to add 604 MW of capacity between the second half of 2024 and 2026.
How much capital investment is required for the data centre expansion?
The expansion will require 3.8 billion USD in capital investment.
Which city is expected to retain its leadership in the data centre market?
Mumbai is expected to retain its position as the leading market.
What government initiatives are driving the growth of the data centre industry?
Key government initiatives include an investment of 1.24 billion USD in AI infrastructure and the nationwide rollout of 5G technology.
What are the broader impacts of the data centre industry's growth?
The growth is expected to demand specialized skills, generate employment in various sectors, and boost industries supplying critical infrastructure.
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