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India's Data Centre Boom: 4 GW Capacity, Rs 1.5 Lakh Cr Investment by 2030

India's data centre co-location capacity is projected to expand dramatically to 4 GW by the fiscal year 2030, requiring massive capital investment. The sector is attracting strong interest due to India's cost advantages and a maturing digital ecosystem, with high occupancy rates from cloud and enterprise clients. Growth is fueled by AI demand and government initiatives, though the industry faces rising costs and infrastructure challenges. Providers are increasingly adopting renewable energy to meet sustainability goals while managing escalating operational hurdles.

Key Points: India Data Centre Capacity to Hit 4 GW by FY30 with Rs 1.5L Cr Investment

  • Capacity to leap from 1.2 GW to 4 GW by FY30
  • Total investment potential of Rs 3-4 lakh crore
  • Revenue CAGR of 24% projected for FY26-30
  • AI workloads expected to power next growth phase
  • High operational costs and sustainability challenges remain
3 min read

Indian Data Centre capacity set to reach 4 GW by FY30 with Rs 1.5 lakh crore investment: Report

India's data centre capacity is projected to reach 4 GW by FY30, backed by Rs 1.5 lakh crore in investment, driven by AI and digital growth.

"The AI-led demand shall catapult the growth story. - Puja Jalan, CareEdge Ratings"

New Delhi, March 26

Indian data centre capacity is expected to increase to approximately 4 GW by FY30, supported by a significant underlying investment potential of Rs 1.5 lakh crore over the next five-year period.

This projected expansion marks a substantial leap for the sector, which has already seen its co-location capacity double to 1.2 GW between FY22 and FY25.

According to a report by CareEdge Ratings, the anticipated capacity augmentation will require vast capital, while tenants are further expected to spend nearly double that amount on IT equipment, bringing the total investment potential to between Rs 3 lakh crore and Rs 4 lakh crore.

The sector continues to draw interest from domestic and international players due to India's competitive advantages, including lower land and power costs compared to global peers. A rapidly maturing digital ecosystem and long-term contractual arrangements provide the industry with strong revenue visibility and stable cash flows.

These factors contribute to high customer stickiness, ensuring that the massive capital outlays are met with sustained demand.

Recent data indicates that absorption levels remain above 90 per cent, reflecting consistent requirements from hyperscale cloud providers, enterprise clients, and the banking, financial services, and insurance segment.

Puja Jalan, Director CareEdge Ratings, said, "The industry is in an upswing with high capex, fundraising capability of strong sponsors and large equity investments targeted to the Indian Data Centre entities. The industry is likely to witness a revenue CAGR of 24% during FY26-30, with steady-state margins ranging between 40% and 42%. The AI-led demand shall catapult the growth story. However, power infrastructure support is critical to realise the industry's potential. Also, the capability to manage cash flows amid rising costs and escalating commissioning timelines shall be key to sustenance."

Despite the growth, the industry faces rising operational hurdles. Data centre costs have climbed between 50 per cent and 70 per cent in recent years, driven by surging land prices and the adoption of advanced cooling technologies.

Commissioning timelines also stretch due to changes in project scopes and delays in obtaining necessary clearances. To meet sustainability goals, providers increasingly turn to renewable energy and green data centre practices, which help improve Power Usage Effectiveness despite the higher initial investments.

"Global AI investments have crossed nearly USD 1 trillion between 2020-2025, with India witnessing strong momentum supported by government initiatives. While data centre demand is currently driven by enterprise IT and cloud storage, AI-led workloads are expected to power the next phase of growth over the next 5-7 years, with the pace of adoption in India linked to the timely scaling of high-performance Graphics Processing Unit (GPU) availability," added Tej Kiran, Associate Director, CareEdge Ratings.

- ANI

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Reader Comments

S
Sarah B
Rs 1.5 lakh crore investment is huge. While the growth is impressive, I hope this leads to more high-skilled jobs for Indian engineers and technicians, not just construction work. The focus on renewable energy is a very positive step.
P
Priya S
Great to see India becoming a data centre hub! Lower power costs are a big advantage. But the article mentions delays in clearances - this is a classic problem. Government needs to streamline approvals to actually realise this potential on time.
R
Rohit P
AI is the future. If we build the GPU and data centre capacity now, Indian startups won't have to depend on foreign cloud providers for heavy computing. This is strategic infrastructure, like building highways for the digital age.
M
Meera T
The cost increase of 50-70% is worrying. Will this make data storage more expensive for end users and small businesses? Hope the economies of scale from such massive expansion help control prices for consumers.
V
Vikram M
Solid report. The revenue visibility from long-term contracts with hyperscalers makes this a safe bet for investors. Domestic players like Adani and Reliance are also in the game now. This sector will create a whole new ecosystem.

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