India’s data centre capacity to cross 1,800 MW by 2026

India’s data centre (DC) industry has demonstrated remarkable growth, with its capacity doubling since the onset of the COVID-19 pandemic. According to a recent report by CBRE South Asia, titled ‘Asia Pacific Data Center Trends Q1 2024’, India’s data centre capacity is expected to surpass 1800 MW by 2026, positioning it above other major Asia-Pacific (APAC) countries.

With its robust growth trajectory, significant investment inflows, and strong policy support, India’s data centre sector is well-positioned to continue its expansion and maintain its leading position in the APAC region.

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In 2023, India’s data centre added 255 MW of new supply, an increase from 200 MW in 2022, culminating in a total capacity of approximately 1,030 MW by the end of the year. A report by CBRE projects that India’s data centre capacity will see an addition of approximately 850 MW during the 2024-26 period, outpacing other significant APAC countries. By the end of 2024, planned supply increases of over 330 MW across various cities are anticipated to boost the total stock by 30% annually, reaching around 1,370 MW.

India currently leads the APAC region (excluding China) with a data centre capacity of around 950 MW, surpassing prominent countries such as Japan, Australia, Singapore, Hong Kong SAR, and Korea. Specifically, Japan follows with 892 MW, Australia with 773 MW, Singapore with 718 MW, Hong Kong SAR with 613 MW, and South Korea with 531 MW.

The sector has attracted significant investments from global operators, real estate developers, and private equity funds, securing more than US$ 40 billion from both global and domestic investors between 2018 and 2023. This influx of capital underscores the sector’s potential for high returns, making data centres one of the top three preferred alternative assets for investors in the APAC region, including India.

Mumbai remains the dominant market, holding over 50% of the total stock in India as of 2023. The city’s reliable power supply, broadband connectivity, and skilled manpower make it a preferred destination. Chennai follows with an 18% share, benefiting from its strategic location on the east coast, which provides robust connectivity to East Asia.

Over 60% of the upcoming supply is expected to be concentrated in Mumbai and Chennai. Delhi-NCR, Bangalore, and Hyderabad are anticipated to account for over 30% of the share collectively. Emerging markets such as Kochi, Jaipur, Ahmedabad, Lucknow, Patna, and Vishakhapatnam are also experiencing growth due to their strategic locations and enhanced infrastructure, including improved power supply and upgraded fibre and cable connectivity.

Policy support and future outlook

The Indian government has actively promoted the DC sector through dedicated policies aimed at attracting operators and investors. These policies include provisions for uninterrupted electricity supply, access to renewable energy, fuel subsidies, and essential infrastructure support for small and medium-sized enterprises (SMEs). Additionally, financial incentives and subsidies for manufacturing DC stacks within state jurisdictions are unlocking numerous investment opportunities.

According to Anshuman Magazine, Chairman & CEO, India, South-East Asia, Middle East & Africa, CBRE, “India, with its favourable market conditions, is attracting multinational corporations (MNCs) seeking to expand their digital services and relocate from other Asian markets due to supply constraints. Sustained demand is expected from BFSI firms, technology corporations, and cloud service providers as they explore alternative solutions such as colocation and hyperscale facilities. Furthermore, engineering & manufacturing firms, along with technology companies, are likely to establish their own DCs specifically dedicated to R&D labs.”

With its robust growth trajectory, significant investment inflows, and strong policy support, India’s data centre sector is well-positioned to continue its expansion and maintain its leading position in the APAC region. The industry’s capacity is set to exceed 1800 MW by 2026, reflecting its critical role in the global digital infrastructure landscape.