India's data centre market drew over $6.5 bn investment in 10 yrs: Report

India’s data centre (DC) market saw investment commitments of over $6.5 billion through private equity, joint ventures, and acquisitions between 2014 and 2024, according to a report by real estate consultancy Anarock Capital.

 

This surge in investment comes as the DC industry recorded a 139 per cent increase in capacity, from 590 megawatt (MW) in 2019 to 1.4 gigawatt (GW) in 2024.

 

The report added that the sector is expected to grow multi-fold, driven by sustained interest from global and domestic investors and improved access to project financing following the grant of infrastructure status to data centres.

 

“DC capacity is further estimated to increase to 2 GW by 2025 and 2.6 GW by 2026 based on the projects currently under construction and in the planning stage,” the report stated.

 

The size of India’s DC industry is currently estimated at $10 billion, with revenue of $1.2 billion in financial year (FY) 2024.

 

“Seventy-eight per cent of the revenue is generated by four major DC operators. While Ebitda growth showed signs of plateauing post-2020, it is projected to rise by 50 to 55 per cent as under-construction projects reach stabilisation,” said Shobhit Agarwal, managing director and chief executive officer, Anarock Capital.

 

Devi Shankar, executive director, industrial, logistics and data centres at Anarock Capital, added that the surge has been supported by rising internet penetration—from 33.4 per cent in 2019 to 55.2 per cent in 2024—a near-doubling in monthly data consumption per user, and an increase in average traffic per smartphone from 13 gigabytes (GB) to 32 GB.

 

“India now leads globally in average mobile data traffic per smartphone, and just this fact alone has had a palpable impact on the demand for high-grade data centres in the country,” she said.

 

Experts believe that artificial intelligence (AI) and the rise of sustainable and edge DCs will drive the next wave of demand in the sector.

 

Ankita Sahu, senior manager, industrial, logistics and data centres at Anarock Capital, said small-scale, decentralised data storage and processing facilities located closer to end users and devices in Tier-II and Tier-III markets are already emerging, bringing computing power nearer to consumers.

 

These include cities like Jaipur, Ahmedabad, Kochi, Visakhapatnam, Lucknow, Patna, and Bhubaneswar. “Edge data centres scale resource-intensive AI projects, improve dependability, maximise bandwidth, and enable context-aware processing,” Sahu added.

 

Currently, Mumbai and Chennai dominate the DC market, accounting for nearly 70 per cent of India’s total IT power capacity. These cities have seen record-breaking supply growth of 92 per cent and 340 per cent, respectively, between 2022 and 2024.

 

Other key markets include Noida at 9 per cent, Bengaluru and Hyderabad at 8 per cent each, and Pune at 4 per cent of the total DC capacity in India.

 

“Together, these regions have contributed to an overall occupancy level of 76 per cent, underscoring strong market absorption and operational efficiency,” the Anarock report stated.