Data centers
The growth of data centers in India is led by massive explosion of data consumption through digitisation, increased cloud adoption, etc., over the last two years | Representative Image: iStock

Data centre capacity to double by FY25 with Rs 40,000-crore funds: Crisil report

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The data centre capacity is set to double by FY25 to 1,700-1,800 mw from 870 mw now with an investment of a whopping Rs 40,000 crore on the back of rising data uptake, digitalisation and localisation, coupled with the launch of 5G services by the end of this fiscal, a report said on Wednesday.

The current data centre capacity is around 870 mw which is expected to double to 1,700-1,800 mw by fiscal 2025, according to a Crisil report which says this massive growth is being powered by the troika of data boom, digital adoption and local data storage mandates.

This massive capacity addition will require investments of over Rs 40,000 crore, the report noted.

The demand for data centres, data and cloud storage has been growing at an exponential level on the back of corporates embracing advanced technologies and digital infrastructure on one hand and increasing use of smart devices by individuals on the other, it said.

Wireless mobile data traffic grew 31 per cent to 253 exabytes (1 exabytes is 1 billion gigabytes) in 2021 as work-from-home became the new normal after the COVID-19 pandemic shut offices, creating huge demand for data centres.

The report expects the launch of 5G services, likely by the end of this fiscal, will further boost demand for data and storage capacities.

Another growth driver is the government push for data localisation — under which it mandates storing sensitive data within the country– and other digital initiatives will be another tailwind, says Nitesh Jain, a director at the agency.

Data centres are emerging as an attractive infrastructure asset class in the country now. The industry is expected to add 850-900 mw capacity during FY23-FY25.

Jain expects the growth to be led by Mumbai, which already accounts for around half of the existing capacity, adding 300 mw more. This growth will be supported by proximal access to sub-sea cables, optic fibre connectivity, uninterrupted power supply and availability of skilled manpower.

The next growth centres will be Hyderabad, Chennai and Pune, adding 400 mw capacity cumulatively.

Of the total Rs 40,000 crore investments, a third will be to acquire land, a fifth for substations, and the balance for civil work, purchase of equipment and fit-outs, says Jain, adding capex will also be required for captive renewable energy sources which are cheaper than grid energy.

According to Rakshit Kachhal, an associate director with the agency, with electricity accounting for 45-50 per cent of the operating cost of data centres, there is sharper focus on an optimum mix of grid power and renewable and the share of renewables in data centre power consumption is expected to increase to 35-40 per cent by FY25 from under 15 per cent now. This will help improve the operators margins by 200-300 basis points by FY25, which will help sustain returns on capital employed at 13-15 per cent.

(Except for the headline, this story has not been edited by The Federal staff and is auto-published from a syndicated feed.)

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