Rewind 2024: Factors that impacted India’s data center industry

The Indian data center sector is among the fastest-growing industries, with its market value surging from $4.35 billion in 2021 to a projected $10 billion by 2027, according to a report by real estate firm CBRE. This rapid expansion is driven by the increasing demand for digital transformation services, advancements in artificial intelligence, and data localization mandates, among other factors. Much of the groundwork for this growth was laid in 2024. Here’s a look at some of the key highlights of the Indian data center sector this year:

Rising investment

Leading players like AdaniConneX, Yotta Infrastructure, and Nxtra (Airtel) have announced substantial investments in building hyperscale data centers.

For instance, Hyderabad-based CtrlS Datacenters announced plans to invest ₹ 400 crore in its upcoming facility in Patna and another one in Hyderabad. Hiranandani Group-owned Yotta Data Services inaugurated new data in GIFT city (in Gandhinagar) with an investment of over ₹500 crore over five years. Airtel’s data center company Nxtra has announced its plans to invest about ₹ 5,000 crore in the next three years to double capacity to around 400 megawatts.

Additionally, data center companies are looking extensively at tier-2, and 3 cities to expand their footprint. CtrlS Datacenters plans to establish 20 such Edge data centers across tier-2 and tier-3 cities in India. Likewise, Yotta has selected North Eastern state Assam to expand its edge facilities to cater to growing demands for computation.

Data center company ESDS started its data center operations in Nashik, which continues to be its headquarters. Going forward, the company plans to build edge data centers in smaller cities even as it expands to metropolitan areas like Mumbai and Delhi. “Times have changed with the advent of edge and container data centers, turning tier-2,3 cities into lucrative destinations for data center investments,” Piyush Somani, the founder and CEO told TechCircle in an earlier interview.

AI-driven growth

Companies leveraging AI at an unprecedented rate for various tasks like predictive analytics, fraud detection, personalized customer experiences, and others. AI requires massive data processing for training and inference models, leading to a surge in the need for high-performance data centers.

This year, as part of the ₹10,000 crore IndiaAI Mission, the Ministry of Electronics and Information Technology (MeitY) plans to establish a Public AI cloud infrastructure with more than 10,000 GPUs to offer computing capacity to Indian start-ups, researchers, public sector agencies and other entities. In August, the government issued a tender inviting bids for procuring the GPUs. Yotta, E2E Networks, Sify Digital Services, CtrlS Datacenters, and NxtGen Datacenter and Cloud Technologies are some of the data center companies that have submitted their bids.

Sustainability takes center stage

As AI technologies—especially generative AI—become central to modern business, the demand for computing power has skyrocketed. Experts suggest that data centers are consuming up to two times the energy required to handle AI workloads. This surge is forcing the industry to rethink its approach to environmental, social, and governance (ESG) goals. The growing prevalence of AI technologies has led to a surge in the demand for supporting infrastructure among Indian enterprises, with up to over 40% observing a doubling in their compute power and storage requirements, according to a September report by storage company Pure Storage.

Consequentially, ESG has emerged as a major value proposition or differentiation that data center companies are offering to clients. “Data centers are highlighting factors like Power Usage Effectiveness (PUE), liquid cooling, and meeting 60% of their energy needs through renewable sources as key parts of their value proposition. They emphasize that GPU compute services providers offer more sustainable options compared to other providers,” Anjani Kumar, Partner at Deloitte told TechCircle in one of the earlier interviews.