Prefabricated Data Centers: A Catalyst for Digital Infrastructure Growth in India

In the heart of Southeast Asia, Singapore’s digital transformation is a masterclass in tech foresight. Just a fraction of the size of Mumbai, the island nation has reshaped its digital landscape through strategic placement of edge data centers, becoming a powerhouse that handles an eye-popping 60% of all data workloads in Southeast Asia. 

Singapore’s secret? A network of more than 50 edge data centers that provide best-in-class connectivity with less than 5 milliseconds latency to nearly every corner of the country. This digital infrastructure has transformed Singapore into a global fintech hub, where everything from instant payments to AI-enabled services run without a hitch.

The Need for Digital Transformation

India, on a much larger scale, is at a similar watershed moment. With its digital economy expected to touch $1 trillion by 2028, India is on the verge of a digital revolution and the need of the hour is a world-class, scalable and secure digital infrastructure. With over 950 million internet subscribers and 650 million smartphone users as of 2024, the country is witnessing an accelerated production of digital footprint, leading to unprecedented demand for data center solutions. More powerfully, conventional data centers, while they have so far underpinned the digital infrastructure, are now increasingly unable to cope with the exponential growth of data consumption and processing needs.

The Prefabricated Revolution

The growing demands in this area have formulated the perfect opportunity for the emergence of a transformative solution: prefabricated data centers. These pre-packaged, factory-integrated facilities provide a radical departure from the way in which digital infrastructure is provisioned and managed. Traditional data centers are generally time-consuming, taking 18-24 months for construction and deployment; while prefabricated deployments can be rolled out in as little as 60-90 days, fundamentally transforming the trajectory of when the infrastructure is built.

According to reports, the global prefabricated data center market is anticipated to reach $79.49 billion by 2030, growing at a CAGR of 17.7 % from  $29.93 billion in 2024. A growing trajectory augurs well for the digital ambitions of the country as it tries to carry digital services beyond metros to reach tier-2 and tier-3 cities. The market expansion is driven by increasing demand for edge computing, cloud services, and the need for rapid deployment of digital infrastructure in emerging markets.

Level of Technical Innovation and Efficiency

Prefabricated data centers have become much more attractive due to technical innovations. This is a big upgrade compared to old data centers, which were built for much lower power densities. Modern facilities can now operate at over 20kW per rack cabinet. With the introduction of advanced cooling systems that support hot/cold aisle containment, facilities are improving their PUE (Power Usage Effectiveness) ratings, typically ranging between 1.2 and 1.5, while the average value in the industry for conventional facilities is 1.8. These improvements yield substantial savings in costs and environmental impacts.

Economic Impact and Growth in the Digital World

The economic impact of prefabricated data centers on India's economy could be substantial. The IT-BPM industry, which is a major  beneficiary of a stronger  digital system, is expected to add $350 billion in gross value  by 2026. The increasing digital payment transactions supports the need for a strong digital infrastructure — the value of transactions through Unified Payments Interface (UPI) went up from 726.93 crore in 2016 to 23.24 lakh crore in 2024, and the number of banks has increased from 35 to 641 in just four years.

Dealing with India-specific Issues

Prefabricated data centers are highly appealing in India due to its unique geographic and infrastructural challenges. With its vast territory, varying climate conditions and levels of infrastructure development, the country requires flexible and adaptable solutions. Modular construction is the best solution as it provides flexibility in getting the data center set up exactly where you need and with optimized power distribution units and cooling systems tailored to the local environment. This agility is essential to service ambitious programs such as BharatNet, which seeks to bring high-speed internet to 2.14 lakh Gram Panchayats.

Emerging Technologies and Interoperability

As things stand, the future of India's digital infrastructure in terms of prefabricated data centers, looks bright with the integration of cutting-edge technologies. These facilities are built to accommodate advanced AI workloads and automated operations, which are essential to India's flourishing technology ecosystem. Prefabricated data centers are a natural fit for edge computing applications critical to IoT devices and real-time data processing, due to their modular nature. This functionality comes even as India’s IoT market is projected to grow to $15.35 billion by 2029.

Sustainability & Environmental Impact

A highly important benefit of prefabricated data centers is their environmental sustainability. With India's commitment to reducing carbon emissions and achieving net-zero emissions by the year 2070, the energy efficiency of these facilities becomes a key objective. In general, prefabricated data centers use about 30% less energy than traditional ones, benefitting from optimized cooling mechanisms and better airflow management. This efficiency is especially significant since data centers now consume about 2% of the world’s electricity.

Economic Feasibility and Future Perspectives

There are some challenges with the financing of prefabricated data centers, but the potential rewards are substantial. Although the upfront capital cost may be higher when compared to traditionally built facilities, total cost of ownership (TCO) over the life of the facility is typically 15-20% lower. The cost advantage results from lower operational costs, quicker time-to-market, and better energy efficiency. Moreover, the modular design of these facilities enables staged capital investment, enhancing their financial viability for developing markets.

These factors are making prefabricated data centers an increasingly critical component of India's digital shift. Robust digital infrastructure will be key as the nation works toward becoming a $5 trillion economy. Prefabricated data centers can play a key role in the government's initiatives – Digital India and Make in India – due to their quick deployment and higher efficiency.  Their ability to handle edge computing, AI and IoT applications, make them ideally suited to meet the current and future demands of India's digital ecosystem.

Prefabricated data centers are more than a technological upgrade — they are a strategic necessity in India’s digital transformation journey. When the contribution of the digital economy rose to 11.74% of GDP in 2022-23, a capable, elastic, and eco-friendly digital infrastructure was the pressing need. As such, prefabricated data centers offer a tested-in-practice solution to cater to these needs, laying the groundwork for sustained technological innovation and digital advancement for India’s future.

Sanjay Surana

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Sanjay Surana is Founder at Group Rhine and Co-founder at Rhine XCircle.