How India's data centre industry may evolve by 2030

India's data centre sector is set for significant growth, driven by a surge in data, supportive government policies, and advancements in sustainability and Artificial Intelligence (AI). This transformation is already underway, positioning the sector for an inflection point, according to a whitepaper published by TechCircle research unit.

The Indian data centre market is projected to grow from $6 billion in 2023 to $15 billion in 2030 at a CAGR of 14%, based on the average estimates of various analyst houses, as per the whitepaper.

As a consequence, India will catapult from the 13th position in the global data centre pecking order to enter the top ten.

The whitepaper refers to two possible evolutionary tracks for the local data centre business by 2030. One scenario straddles consolidation and specialisation, with larger global firms likely acquiring smaller, strategically located companies. Niche areas such as green data centres, AI-focused infrastructure, and edge computing will define the market.

The other scenario could be the shift towards creating hyper-connected ecosystems, emphasising interconnected data centre networks and integrated services over standalone facilities.

Comparing these scenarios to prevailing market dynamics, the whitepaper points to a shift from a nascent market to one characterised by either specialisation or deep integration. This reflects the increasing maturity of the Indian data center industry and its growing importance in the global digital landscape.

Companies like AdaniConneX, Digital Realty, Princeton Digital Group, Equinix, and Colt have been expanding their data centre operations in India over the past five years. By 2030, India is anticipated to be one of the largest data-generating nations, driven by the rise of smartphones, Internet of Things (IoT) devices, and digital services. This data explosion will necessitate expanded infrastructure for storage, processing, and management.

Edge computing will gain prominence for real-time data processing and low-latency applications, leading to a shift towards decentralised data centres closer to data sources, enhancing processing efficiency for applications like autonomous vehicles and smart cities.

Sustainability will be a key focus, with data centres adopting energy-efficient technologies and renewable energy by 2030. Innovations such as liquid cooling, AI-driven energy management, and solar and wind power will align with global sustainability objectives.

Government initiatives, including the Digital India programme and data localisation policies, will shape the data centre landscape, fostering supportive regulations and incentives to attract investment. The establishment of data centre parks and special economic zones (SEZs) will further stimulate growth.

Substantial investments from domestic and international players are expected, with strategic partnerships driving innovation and advanced technologies in the Indian market. This influx of capital and expertise will expedite the development of cutting-edge data centres nationwide.

However, challenges remain. Land acquisition is a significant hurdle, the report said, especially in major cities like Mumbai, where prices can reach $50-100 million per acre. Ensuring a reliable and affordable power supply is crucial, particularly as the industry shifts towards renewable energy to meet sustainability goals.

Additionally, there is a shortage of skilled professionals. With the increasing reliance on specialised areas such as AI and advanced infrastructure management, demand for talent is surging. A recent Nasscom report indicated a need for an additional 100,000 data centre professionals by 2025. Addressing this talent gap is essential for the industry's growth and efficient operation, underscoring the need for strategic planning and investment to overcome these challenges and sustain the rapid expansion of the data centre market.