India's data centre industry now worth $10 bn, shows explosive growth

Indian data centre industry has attracted more than $6.5 billion in investments over the past decade from private equity, joint ventures, and acquisitions: Anarock Capital report

India’s data centre industry is now estimated to be worth $10 billion, generating around $1.2 billion in revenue for financial year 2023–24 (FY24), a report by Anarock Capital revealed on Monday. The market is dominated by four major data centre operators, responsible for 78 per cent of the industry’s revenue.

 

Although operating profit growth levelled off after 2020, it is expected to increase by 50–55 per cent as under-construction projects reach operational stability, the report said. Capital deployment has also been robust, with $4.2 billion invested on the ground till FY24, split between $2.6 billion in equity and $2.4 billion in debt as of March 2024.

   

The Indian data centre industry has attracted more than $6.5 billion in investments over the past decade from private equity, joint ventures, and acquisitions. The sector has experienced explosive growth, with total capacity expanding by 139 per cent to 1.4 gigawatts (GW) in 2024 from 590 megawatts (MW) in 2019.

 

What is driving India’s data centre growth?

This rapid expansion is closely linked to India’s rising internet penetration, which surged to 55.2 per cent in 2024 from 33.4 per cent in 2019. Concurrently, data consumption per user has nearly doubled, increasing to 21.1 GB per month from 11.5 GB, while average mobile data traffic per smartphone has more than doubled to 32 GB from 13 GB. These trends have fuelled demand for high-grade data centres.

 

Where are India’s major data centre hubs?

The report highlights that the industry is primarily concentrated in major cities. Mumbai and Chennai together account for about 70 per cent of India’s total IT power capacity, with Mumbai alone contributing nearly half (49 per cent). These cities have also seen the highest growth, with Mumbai’s supply increasing by 92 per cent and Chennai’s by 340 per cent between 2022 and 2024.

 

Other key markets include Noida (9 per cent), Bengaluru (8 per cent), Hyderabad (4 per cent), and Pune (5 per cent), contributing to an overall occupancy rate of 76 per cent—a strong indicator of market absorption and operational efficiency.

 

In addition to capacity growth, the report notes a surge in land acquisitions for hyperscale data centres, with nearly 440 acres acquired in the last five years.

 

Hyderabad leads this trend, accounting for 69 per cent of the land, followed by Mumbai (22 per cent) and Pune (9 per cent). This trend underlines the country’s growing attractiveness to global tech giants that favour the ‘own-and-operate’ model.

 

AI to drive data centre demand

As artificial intelligence (AI) continues to gain momentum, the demand for next-generation data centres capable of handling more advanced workloads will rise.

 

To meet these demands, new data centres will need to incorporate cutting-edge technologies, including liquid cooling systems, to handle higher rack densities exceeding 30–40 kW per rack. These facilities will also be required to support heavier floor loads, with some designs accommodating up to 2,500 kg per square metre to sustain increasingly powerful computing systems.

 

Sustainability will be a core focus as the industry expands. The move towards green data centres will gain momentum, with greater emphasis on energy-efficient designs, the use of renewable energy sources, and sustainable cooling technologies.

 

Rise of edge data centres in tier-2 and tier-3 cities

The rise of edge data centres is anticipated in tier-2 and tier-3 cities such as Jaipur, Ahmedabad, Kochi, Vizag, Lucknow, Patna, and Bhubaneswar. These smaller, decentralised facilities will play a crucial role in processing latency-sensitive applications and supporting generative AI services by bringing computational power closer to end-users, improving performance and responsiveness.