India's data centre capacity to double up by 2024 to 1318 MW

India's data centre industry has been on a high growth trajectory reaching a 637 megawatt (MW) of capacity in the first half of 2022, a 16% rise compared to 551 MW in 2021, and is expected to reach 1318 MW by 2024, according to a new study. 

The study done by commercial real estate services company JLL India’s report titled: Data Centre Update: H1 2022, also said that an increasing data usage in the financial, entertainment and retail domain and increase in the number of cloud service providers are driving India’s data centre (DC) industry growth, leading to demand for 7.8 million square feet real estate space by 2024. This will entail an investment of $4.6billion, it said, adding that Mumbai, Bangalore and Chennai comprise 75% of India’s data centre market, followed by Delhi-NCR, Pune, Hyderabad, and Kolkata, said the report. 

“Mumbai on account of the highest share of capacity addition would entail a demand for 4.6 million square feet, followed by Chennai at 1.9 million sq. ft and Delhi-NCR at 0.7 million square feet,” said Samantak Das, Chief Economist and Head of Research & REIS at JLL India. 

“Regulatory approvals and construction period would lead to a 3–4-year timeframe for the DC capacity to become operational. Some players are opting for the conversion of existing industrial buildings to DC facilities by using retrofit options to meet technical parameters,” added Das. 

He further said that the expected supply addition would entail an investment of $4.6 billion during H2 2022-2024. “Mumbai will require $2.7 billion with a major share of expansion expected in the Navi-Mumbai region. Chennai would require $1.1 billion investments while Delhi-NCR would need $0.6 billion,” he said. 

Rachit Mohan, Head, Data Centre Advisory, India, JLL, said, “The sustained and growing pace of digitalisation has been one of the positive impacts of the pandemic. With government digital initiatives and support from various stakeholders, a significant transformation has been witnessed in sectors like education, healthcare, e-commerce and life sciences. This has led to strong growth for data centre storage and computing which is reflected in the continued growth of the Indian DC industry.” 

“The increasing pace of digitisation of the economy would translate to higher data and compute requirements. This will lead to strong growth for the DC industry over the next few years.” he added. 

Operators have been following the strategy of building capacity based on pre-commitments by hyper-scale cloud players with a minimal speculative capacity build. As a result, overall occupancy stood at 92.5 % of the supply. Mumbai and Chennai together accounted for 83% of the supply during the first half of 2022. 

Apart from colocation supply, self-build ambitions by cloud service providers (CSPs) are visible in some DC hubs. Hyderabad has been successful in attracting CSPs to set up self- build capacities by offering regulatory incentives and a proactive approval process by the state government. On the other hand, Delhi-NCR has been able to attract colocation operators to set up operations in the region. The colocation data centre offers space for rent to third parties to maintain their servers or other network equipment, the survey said.