The capacity of India’s data centre industry is poised to more than double to 2-2.3 GW by fiscal 2027, driven by accelerating digitalisation across the economy, according to a recent Crisil Ratings report. This growth is largely attributed to enterprises investing heavily in cloud storage solutions to meet rising demands.
The report highlights the increasing adoption of Generative Artificial Intelligence (GenAI) as a key factor propelling data centre demand. GenAI’s requirements for higher computational power and ultra-low latency are expected to significantly boost the industry’s growth trajectory in the medium term.
Crisil also emphasized the financial health of the sector, predicting stable cash flows that would maintain strong credit profiles for players in the industry.
Data centres, which consist of vast networks of servers for remote data storage and distribution, are seeing renewed investment interest. Government-mandated data localisation policies and state-level incentives are further fueling the expansion of this critical infrastructure.
Two key trends underpin the demand for data centres in India. First, the rapid shift of businesses to digital platforms, including cloud services, has accelerated since the Covid-19 pandemic. Second, high-speed internet accessibility has driven a surge in internet usage, including on social media platforms, over-the-top (OTT) streaming services, and digital payment systems.
Mobile data usage has witnessed a compound annual growth rate (CAGR) of 25% over the past five fiscal years, according to Crisil. Average monthly data usage stood at 24 GB per user at the end of FY24 and is projected to reach 33-35 GB by FY26.
“To meet the growing demand for data centres, an investment of ₹55,000-65,000 crore will be required over the next three fiscal years. These investments will primarily focus on land and building, power equipment, and cooling solutions,” said Manish Gupta, Senior Director and Deputy Chief Ratings Officer at Crisil Ratings.
Gupta further said that data centre operators typically invest in infrastructure—accounting for 25-30% of overall capital expenditure—with future tie-ups in mind.
The expansion plans of existing players, coupled with the entry of new operators, are expected to drive capacity additions. This growth is further supported by hyperscalers—large-scale data centres catering to businesses with extensive digital infrastructure requirements.
(Inputs from ANI)