Data center capacity in India is expected to double by 2026

India’s data center industry is poised for significant growth, with its capacity forecasted to double to 2,000 MW by 2026. This expansion is expected to attract investments totaling Rs 50,000 crore over the next three years.

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According to CareEdge Ratings, India’s data center industry will double to approximately 2000 MW by 2026. The growth plans have also created significant investment opportunities, according to CareEdge Ratings, which estimates a capex of Rs 50,000 crore in this space by 2026.

CareEdge Ratings believes that there is a significant under-penetration of data center capacity in India, paving the way for large capacity expansion plans. The report emphasises India’s transition to a developed market economy.

This wave of digitization, fueled by the growth of e-commerce, fintech platforms, online streaming, and gaming services, is expected to increase the number of internet users and boost internet penetration from approximately 63% in FY23 (April 1 to March 31) to 87% by FY29.

While India generates approximately 20% of global data, it accounts for only 3% of total data centre capacity. CareEdge Ratings believes that the adoption of technologies such as 5G, IoT, and AI will significantly increase demand for data and, thus, data centers. Overall, these demand factors are expected to triple data consumption in India.

Highlighting the need for data centers, the CareEdge Ratings report states that the per-MW cost of setting up a data centre in India has risen due to incremental land, equipment, and other soft costs, with new capacities now being built at a cost of Rs 60-70 crore/MW.