India's data centre industry capacity to double by 2023 to 1,008 MW: Report

The capacity of data centre industry is expected to double by 2023 to over 1,000 MW to meet the rising demand amid sharp growth in digitalisation, according to property consultant JLL.

The industry's capacity is expected to double from 499 MW in January-June 2021 to 1,008 MW by 2023, it added. MW indicates IT design power load.

The capacity expansion is "driven by strong digitalisation, rising cloud adoption and ambitious growth plans of data centre operators", JLL India said in a statement.

JLL released its 'H1 2021 India Data Centre Market Update' on Tuesday.

Stating that acceleration of digitalisation has forced enterprises to scale up their IT infrastructure, the consultant said a strong demand for co-location/cloud facilities, which offer scalability, security, and connectivity at lower costs, has been witnessed across India.

Investors and global data centre players have increased their commitment during the last six months in the India market by announcing joint ventures to meet expected demand, it added.

"The demand momentum which picked up pace in 2020, continues to grow unabated. The Indian data centre industry witnessed 46.4 MW absorption during H1 2021 - equivalent to 90 per cent of supply addition during the period (H1 2021), indicating robust absorption growth," said Rachit Mohan, Head, Data Centre Advisory-India; Co-Head, Office Leasing Advisory, Mumbai, JLL.

He said the demand has been growing rapidly on increased digital usage emerging from distributed workforce, growing data security concerns and business disruptions.

"Banking and financial services are adopting hybrid options to meet digital growth. Home-grown video and gaming platforms in midst of robust user growth are also fuelling the data centre industry demand. Furthermore, telecom players are formulating the rollout of 5G which is expected to drive exponential growth in data consumption, Mohan said.

Samantak Das, Chief Economist and Head of Research & REIS (India), JLL, said the global investors and data centre players have increased their commitment during the last six months, announcing joint ventures with operators to set up sites.

"Investment commitments to the tune of USD 3 billion highlight the growth potential, with the data centre industry expected to double its capacity and cross the 1GW mark by 2023," he said.

Mumbai, which currently accounts for 45 per cent of the total capacity, is expected to further add 267MW between now and 2023, Das said, adding that various states have also been providing incentives for data centre industry.

The consultant noted that data centre operators are adopting large land acquisition strategies to fulfil the long-term requirements of hyperscalers (large cloud players and occupiers with massive computing requirements).

"These operators would provide occupiers with flexibility in terms of availability zones, fiber pathways and power provisions required for large scale expansions in less time. Players are also adopting strategic alliances by investing in new submarine cables to meet the growing demand," JLL said.