Data centers in India attract investment of $10 bn since 2020: Report

Data centers have received investments of $10 billion (about ₹81,247 crore) since 2020 as demand for such facilities has risen amid sharp growth in data consumption, according to property consultant Colliers India.

In its report Data Center: Scaling up in Green age, the consultant projected that India’s data center stock is likely to double to about 20 million square feet by 2025 from its current capacity of 10.3 million square feet.

India currently has about 770 MW data center capacity across the top seven cities, Mumbai, Delhi-NCR, Bengaluru, Chennai, Hyderabad, Pune and Kolkata.

“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.

At the same time, data center operators are enthused by the incentives such as subsidised land, stamp duty exemption, etc. provided by several states,” the statement said.

Also Read: PhonePe investing $200 million to build data centers in India

Mumbai accounts for the largest share of data centers at 49 per cent, benefiting from the presence of a landing station and submarine cable connectivity.

Delhi-NCR has about 17 per cent of the total data center capacity, followed by Bengaluru.

“Since 2020, data centers have received cumulative investments of $10 billion and have seen surging partnerships between developers and global operators. The investments are from global data center operators looking to expand into India, investments from corporates and real estate developers, and private-equity fund,” Colliers said.

Rising data consumption, coupled with favourable government policies have spurred investments in the sector in the last two-three years, it added.

“Data centers are capital intensive and investors with a long-term horizon are exploring this asset class. While real estate costs are only about 25 per cent, there is ample opportunity for developers and investors in this space. At the same time, there is now a greater need to make data centers more sustainable,” Colliers India CEO Ramesh Nair said.

Also Read: Gautam Adani to invest $100 billion in new energy and data centers

At present, only 22 per cent of the existing data center stock is LEED-certified, he added.

“Global operators are increasingly investing in low-carbon and energy-efficient technologies to reduce the impact on the environment and achieve optimum efficiency. Edge data centers are the next big opportunity in India, as these data centers support the sustainable transition of data centers through smaller footprint and lower energy consumption,” Nair said.

While metro cities remain core hubs for data centers, Tier-II cities are also witnessing traction. Currently, Tier-II cities hold only three per cent of the total data center stock in India.

However, key data center operators are eyeing cities like Vijayawada, Nagpur, Raipur, Kochi, Patna and Mangalore as potential locations for setting up edge data centers and as disaster recovery sites.

(With inputs from agencies)