Is India Building Enough To Power Its Digital Transformation
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Is India BUILDING ENOUGH to Power it’s Digital Transformation?
WIP
CONTENTS
• Executive Summary....................................................................................... 04
• Potential Capacity Estimation.................................................................. 06
• Market Update: 2023.................................................................................... 08
• Key Industry Milestones................................................................................ 12
• India vs Other Nations................................................................................... 14
• An Assessment: India’s Required Data Centre Capacity................. 25
• Conclusion........................................................................................................ 30
• Annexure 1: City Overview........................................................................... 31
• Annexure 2: Power Story............................................................................. 38
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EXECUTIVE SUMMARY How many data centers does India need? Today, an average Indian cell phone user consumes over 19 GB of data per month, the highest in the world. Despite this, India lags in parameters such as internet penetration, smartphone penetration, OTT subscriptions, social media users and data centre capacities. At the end of 2023, India’s installed colocation (Colo) data center capacity stood at 977 MW (IT load). About 258 MW came in 2023 across its top 7 Indian cities. This is a formidable number and surpassed the capacity addition in 2022, which stood at 126 MW. The 2022 capacity addition was also 24% higher than the capacity added in 2021. During the second half of 2023, operators added 93 MW of IT capacity across Mumbai, Chennai, and Delhi NCR. Are we building enough or are we barely catching up? How does India with one of the highest data consumption rates compare to other countries? This document shares insights by comparing select major DC markets worldwide. We have compared mature and emerging markets to determine the potential journey the DC asset class may take in India. India will always remain unique compared to mature Western economies due to its vast population and fast-growing GDP. Our analysis requires a balanced approach of benchmarking various ratios and then determining a range within which Indian parameters could settle. Both mature and emerging economies are witnessing equivalent or much larger capacity additions. For instance, the US, the largest data center market globally, is expected to add around 2.7 GW over the next five years, taking the total installed capacity to over 11 GW within this timeframe. India’s under-construction (U/c) Colo capacity addition stands at 1.03 GW for 2024-2028. An additional 1.29 GW is planned, and operators have been building land banks with 3-4 GW development potential over the medium to long term. If we take an example of China, it is adding a larger capacity (2.5 GW under construction & planned), which will eventually help the nation reduce the gap between data generation and supply of data storage facilities. Within the APAC region, mature markets like Japan and Australia are expected to add around 1.3 – 1.6 GW (under construction & planned). Apart from China, Indonesia is another emerging market that stands out regarding capacity addition vis-a-vis its population. The country is likely to add close to 500 MW over the next five years compared to the existing capacity of 188 MW. Will India require additional capacity over-and-above what is planned, or based on existing investments, is India already heading towards a potential oversupply situation? Will India continue to play catch-up in the mid-term, even after significant investments? Will the significant investment in creating data center capacities across India be just sufficient to meet growing demand and still not be adequate to cater to the market over the next decades? This paper will attempt to ascertain potential answers through a detailed analysis.
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INTRODUCTION
India has increased it data centres, owned by both Colocation (Colo) and Cloud firms, at growing speeds over the last few years. From a total of 102MW of installed IT load capacity added in the entire year of 2021 to the addition of 258 MW of IT load in 2023, the project delivery speed has come a long way. This delivery speed will likely rise further over the next five years until 2027. To better understand this growth, a few significant points to note are: By 2028, India will have 3X installed capacity with a total IT load of 3.29 MW. An average of 464 MW of Colo capacity will be added annually between 2024 and 2028 across the top 7 cities. These numbers may look massive, but economies across the world (developed and emerging) for e.g. US, China, Japan, and Australia, are also adding equal or higher capacities despite having relatively healthier installed capacity currently. This paper delves into the crucial question of whether India can bridge the gap with more mature data center markets. To do this, we need to understand why countries are racing to strengthen their data center capacities and determine if India can keep pace or risk falling behind. India currently needs to improve amongst comparable developed and emerging economies regarding metrics for data generation compared to data center capacities. India’s data generation, particularly through smartphones, is significant. For every 1MW of installed Colo capacity, there is a substantial 13.2 Petabyte (PB) of data generated. This ratio is a key indicator of India’s potential for data center growth. As against that, mature economies such as the USA, UK, Australia, and Singapore have a much lower ratio. Data generated per 1 MW of installed Colo capacity stands at 0.3 PB, 0.4 PB, 0.3 PB, 0.1 PB for the USA, UK, Australia, and Singapore, respectively. Even some nations in Asia Pacific such as China are relatively better, with data generated per 1 MW of Colo capacity at 4.5 PB. Taking another example from the same region, India is better off than Indonesia, where the data generated per MW of IT capacity is 18.8. This is just one parameter that suggests that India has a long runway to grow its DC capacity. We have studied similar ratios to determine the potential gap between India and other economies. Using these ratios as benchmarks, we extrapolated the potential gross capacity India might have to build to bring India’s ratios closer to the relevant economies. Readers should note that we recognize there are various ways to slice the pie. Different parameters could be used, and alternate countries/ approaches considered. Our analysis is an attempt to begin answering questions posed by all stakeholder in the data centre space.
POTENTIAL CAPACITY ESTIMATION
During the study, we maintained conservative estimates while evolving two approaches to potential capacity estimation for data centers in India: For these approaches we used our benchmark nation as China. We considered data as of end-2023 for parameters including installed colo capacity, smartphone penetration, average mobile data consumption per user, internet users for all countries, including India, for our analysis.
APPROACH I:
APPROACH II:
Mobile phone data generation approach: In this approach we compared the Petabyte/MW metric for 10 countries for the current and forecasted period using parameters such as smartphone penetration, average data usage / consumer/month and installed Colo capacity. We then estimated the surplus IT capacity (over and above the UC & planned projects) that will be required in India to reach the same level as a benchmark nation.
Internet users’ approach: In this one we compared the internet users/MW metric for 10 countries for the current and forecasted period using the parameters internet users and installed Colo capacity. We then estimated the surplus IT capacity required to reach the same level as a benchmark nation.
Both these approaches suggests that, on a conservative basis, there is a need for India to add another 1.7 to 3.6 MW of IT load to its on-going capacity addition (both, under-construction and planned combined) for it to close the gap with closest comparable nations.
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MARKET UPDATE 2023
105% MORE CAPACITY ADDED IN 2023 COMPARED TO FULL YEAR 2022
CHART-1: INDIA DATA CENTER COLO CAPACITY ADDITION & ABSORPTION IN RECENT YEARS
Total Colo IT Load 977 MW
Current Vacancy Rate 26.3%
Total Hyperscale IT 68 MW
+258 MW
977 MW
1000
1000
+126 MW
. Under Construction Colo IT Load (2024 – 2028) 103 GW
Planned Colo IT Load (2024 - 2028) 1.29 GW
719 MW
Occupied Stock 720 MW
720 MW
800
800
610 MW
+102 MW
593 MW
491 MW
600
600
515 MW
400
400
Data Centre installed capacity (IT Load) across top 7 cities.
200
200
0
0
2021
2022 2023
2020 2021
2022 2023
Installed IT Load (MW)
Total Absorption (MW)
109
MW 139 MW
113 MW
Delhi NCR
Source: C&W Research
OPERATOR-WISE FUTURE COLO SUPPLY PIPELINE (2024-2028) capacity addition in the DC space has been rising every subsequent year post COVID. 2023 has seen an addition of 258 MW which is 105% higher than that of full year 2022. The expectation is that 250+ MW is likely to be added in 2024. RAPID ADDITION OF CAPACITY AND CHANGING OPERATOR LANDSCAPE OVER NEXT FIVE YEARS In the most recent period, enterprises dominating India’s Colo data center market have included NTT, STT, Nxtra, Sify, and CtrlS. These five entities together account for almost 77% of the overall Colo capacity. However, a few new entrants have been expanding quite aggressively, and soon, we will witness entities such as CapitaLand and BAM Digital Realty making deep inroads into the Indian market. There will be immense capacity addition shortly, and the market is poised to witness changes in the operator landscape. New entrants will help the market to diversify and bring in the much-needed volume of inventory.
52 MW
5
301 MW
MW
916 MW
531 MW
Mumbai
Kolkata
27 MW
53 MW
13 MW
Pune
MW
36 MW
Hyderabad
MW
55 MW
23 MW
96 MW
Bengaluru
182
152 MW MW MW 144
Chennai
MW UC Planned
Source: C&W Research
Mumbai accounts for 54% of all existing installed capacity and boasts of having the largest share in u/c and planned capacity. This is followed by Chennai with 15% share of installed capacity and 14% share in u/c and planned capacity. Delhi NCR and Hyderabad are emerging as strong hub of Colo DCs.
Note- Total built up area of colo data centres across the top 7 cities stands at 13 MSF as of 2023; u/c & planned figures are for 2024- 2028
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CHART-2: OPERATOR-WISE BREAK-UP OF EXISTING AS WELL AS UPCOMING INSTALLED CAPACITY
CHART-3: CITY-WISE BREAKUP OF EXISTING AND U/C / PLANNED SUPPLY
TOP 7 CITY-WISE COLO CAPACITY (AS OF 2023)
TOP 7 CITY WISE FUTURE COLO SUPPLY PIPELINE, 2024 – 2028
Operator wise Colo Capacity
8%
4%
NTT STT Sify CtrlS
OPERATOR WISE COLO CAPACITY (AS OF 2023)
2%
1%
8%
3%
4%
4%
977 MW Total Colo Capacity as of 2023
5%
9%
Nxtra Yotta AdaniConnex Web Werks PDG Others
31%
10%
11%
11%
977 MW Total Colo capacity as of 2023
2.32 GW* Additional Colo capacity (UC & Planned)
54%
51%
15%
11%
11%
14%
COLO OPERATORS SHARE IN UPCOMING PAN INDIA IT LOAD (2024-2028) 2.32 GW Additional Colo capacity
15%
15%
CtrlS 10%
AdaniConnex 9%
Sify 11%
NTT 18%
Yotta 7%
Web Werks 4%
Capita Land 6%
Mumbai
Chennai
Delhi
Bengaluru
Pune
Hyderabad
Kolkata
Source: C&W Research *Note: 2.32 GW is not a cumulative figure but the new capacity addition by 2028
BAM Digital Realty 3%
Ever Yondr 3%
Nxtra 12%
STT 10%
Others 7%
While the operator landscape is rapidly evolving, the concentration of operator activity remains consolidated in the top 3 cities of Mumbai, Chennai, and Delhi-NCR, although Hyderabad has been fast emerging as a preferred destination.
Source: C&W Research Note: The figures in the chart above are based on announced/publicly available figures.
The operator landscape is changing rapidly as new entrants make their way into India’s DC space. As of 2023, the top-5 operators account for 77% of India’s Colo installed capacity. However, dominance of top-5 is likely to get reduced to ~51%% in the medium term. Players such as Adaniconnex, Colt, BAM Digital, CapitaLand are aggressively expanding in this space. TOP-3 DC MARKETS TO REMAIN SIGNIFICANT EVEN WHEN MARKET LANDSCAPE IS CHANGING Mumbai remains the dominant market by supply, accounting for 54% of the overall installed Colo capacity in India. Chennai and Delhi-NCR complete the list of top-3 Colo markets, accounting for more than three-fourths of the market share in India. The increased capacity addition estimated for the near future, as well as the entry of new operators, is likely to alter the market structure across the top 7 cities, primarily with the emergence of Hyderabad as a critical data center location. Hyderabad is expected to join the current top markets of Mumbai, Chennai, and Delhi-NCR due to several under-construction and planned developments by players such as CapitaLand, CtrlS, Sify, and Adaniconnex. Many more facilities are in the planning stages, with land sites already acquired
HYPERSCALE DCS: WHAT’S GOING-ON IN THAT SPACE?
A significant quantum of self-build projects of hyperscalers such as AWS and MS Azure are also expected to go live by 2027. AWS launched its new cloud region in Hyderabad in 2022 with its greenfield captive cloud data centre going live. The total operational cloud self-build capacity stood at 68 MW as of end-2023 with u/c and planned capacity of 96 MW and 226 MW, respectively. Hyperscalers have also moved ahead on land banking, with AWS and MS Azure acquiring land parcels across Mumbai, Thane, Hyderabad, and Pune for future development.
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KEY INDUSTRY MILESTONES
Investment/ Acquisition in Data center space
Market activity/ partnership in Data center space
Administrative/Policy Update relevant to Data center
Over a short period of three years, a host of developments have happened in the DC space w.r.t. government policies, announcement of JV/JD platforms, entry of new players etc. The Indian DC ecosystem is fast becoming conducive for receiving mega investments into the sector.
1
AUG 2020 Equinix enters India with GPX India acquisition aug 2020 2
3
4
JAN 2021 UP cabinet approves UP data center policy- 2021
FEB 2021 Adani Enterprises and Edge Connex jointly develop data center business in India
JUL 2021 Brookfield Infrastructure with Digital Realty to form BAM realty
5
JUL 2021 Yondr Group & Everstone Group announces Partnership
9
8
6
7
APR 2022 Karnataka data center policy 2022 approved
FEB 2022 Data center gets ‘Infrastructure status’ in Union Budget ‘22
NOV 2021 Kotak Special Situation Fund Invests in Sify Group
NOV 2021 Tamil Nadu Data Centre Policy 2021 released
10
JUN 2022 Carlyle Group acquired stake in Nxtra India
14
15
11
13
12
FEB 2023 Union Budget ‘23 proposes to create ‘Data center Embassies”
JUN 2023 Iron Mountain takes stakes in Web Werks
JUN 2023 Lok Sabha passes Digital Data Protection Bill, 2023
NOV 2022 Amazon india launches
JAN 2023 Microsoft plans to set up 6 datacenters in India
AWS Services in Hyderabad india
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GROWTH DRIVERS
INDIA’S DC COLO MARKET KEY DRIVERS – THROUGH CHARTS
CHART-5: GROWTH OF MOBILE BROADBAND SUBSCRIBERS
73%
1000
68%
65%
62%
800
55%
600
42%
29%
400
19%
12%
7%
200
0
DATA CONSUMPTION BOOM • India is a "mobile first nation" • Mobile broadband subscibers rose 3.5X since 2016 • Avg. mobile data usage - 19.5GB per user per month
EXPANSION OF SUB-SEA CABLES
DOUBLING OF POWER GENERATION
5G CONNECTIVITY
LOW COST OF DATA
2014 70
2015 120
2016
2017
2018
2019
2020 724
2021 765
2022
2023
217
345
500
624
799
865
Million
•
Mumbai and Chennai have 12 and 4 sub sea cable landing stations currently. Additionally, these two cities are likely to receive 5 (Mumbai) and 3 (Chennai) more cable landings, consolidating the market further. Cable landings in the two cities over the next 2-3 years are higher than some of APAC’s gateway cities of Singapore, Hongkong, Jakarta, and Sydney.
•
Fastest addition of power generation
• Oct-22: 5G services
•
1GB data price in India is lowest amongst comparable nations India - $0.17, China - $0.41, Indonesia - $0.46, Singapore - $0.61, Australia - $0.57
Source: Telecom Regulatory Authority of India (TRAI)
launched in India
capacity amongst comparable nations
Mobile Broadbrand subscribers (In Million)
Share of total telephone Subscribers (%)
• Avg. data
consumption expected to double in 5 years
•
•
•
At present, India generates ~415 GW of power. By 2030, capacity is expected to double to ~820 GW. Renewable sources will dominate future capacity
• OpenSignal
report (Sept 20): 5G users
consume 1.7X to 2.7X more data than 4G users
Over the past decade, both telecom and broadband subscribers in India have experienced exponential growth, with the number of subscribers increasing in both rural and urban areas. This significant growth has led to a meteoric rise in data consumption across the country. Amongst the leading cities in APAC, Mumbai and Chennai are expected to witness a substantial increase in sub-sea data cables. This infrastructure development will not only enhance cross-border data connectivity with India but also pave the way for India to become a hub for data storage within the region/sub-region.
•
•
addition of Indiamonth
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TABLE-1: EXPANSION OF SUB-SEA CABLES
India is currently counted amongst the smallest user bases for 5G coverage, understandably so because 5G services were launched relatively late in October 2022. However, since its introduction, the 5G user base has witnessed considerable growth and is likely to reach approximately 47% by 2028. 5G data users consume nearly twice the data consumed by other users. This is a big boost for the demand for data services, including secure data storage. India’s low cost of data is one of the major drivers for a high amount of data consumption in the country. This advantage is likely to prevail in the coming years as well.
APAC GATEWAY CITIES
EXPECTED NO. OF SUB-SEA CABLES
CABLE TITLES (OPERATIONAL YEAR)
Country
• • • • • • • • • • • • • • • • •
India Asia Express (2023) India Europe Express (2024)
CHART-7: AVERAGE PRICE OF DATA ACROSS COUNTRIES
Raman (2024)
Mumbai
India
5
SwaMeWe-6 (2025)
India’s low cost of data is one of the major drivers for a high amount of data consumption in the country. This
Avg. Price of 1GB Data in US$
Singapore India Gateway (SInG) Cable (2026)
$12.55
India Asia Express (2023)
$12.0
eaMeWe-6 (2025)
Chennai
3
India
Singapore India Gateway (SInG) Cable (2026) Asia Connect Cable-1(2025)
$10.0
Singapore
Singapore
2
Hawaki Nui (2025)
advantage is likely to
Asia Link Cable (2025)
$8.0
Hong Kong
China
2
prevail in the coming years too.
$5.62
Cambodia Hong Kong ( 2024) Asia Connect Cable-1 (2025)
Jakarta
Indonesia
3
Bifrost (2024)
$4.0
$3.85
Hawaiki Nui (2025)
East Coast Cable System (2024)
Sydney
Australia
2
Hawaiki Nui (2025
$2.0
$0.79
$0.46
$0.41
$0.57
$0.61
$0.17
CHART-6: 5G CONNECTIVITY 5G POPULATION COVERAGE ACROSS SELECT NATIONS
0
5G Coverage (% of Population)
100%
80%
S.Korea
UK
China
USA
Japan Australia
Singapore Indonesia
India
Service Lunch (Month/Year)
Apr-19
May-19
Jun-19
Oct-19
Mar-20 May-20
May-21
Jun-21
Oct-22
60%
Source: Cable.co.uk, Statista, C&W Research
40%
20%
India’s low cost of data is one of the major drivers for a high amount of data consumption in the country. This advantage is likely to prevail in the coming years too.
95%
81%
35%
80%
10%
93%
95% 90%
100%
0
Japan
USA
China
India
UK
S.Korea
France
Singapore
Australia
Source: European 5G Observatory, Asian Telecom, Counterpoint Research, Reliance Jio & Bharti Airtel company reports, Statista
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CHART-8: CURRENT AND FORECASTED POWER GENERATION CAPACITY IN SELECT NATIONS
Forecasted Generation Capacity 2030 (GW)
Current Generation Capacity 2022 (GW)
2900
2500
1315
1140
820
472
415
325
270
140
190
105
88
81
167
164
Australia
China
India
Indonesia
Japan
S.Korea
UK
USA
Source: Indian Ministry of Power, Energy Information Administration USA, Global Data, World Bank, International Trade Administration USA, CW Research estimates.
India is among the few nations looking to double its power generation capacity to 820 GW by 2030, benefiting large power-consuming industries, including data centers. The availability of ample power supply is a key criterion for the data center industry, which is also sensitive to the quality of the power supply. Interestingly, of the 820 GW expected by 2030, a dominant 61% is likely from renewable sources.
CHART-9: FORECASTED NON-RENEWABLE AND RENEWABLE INSTALLED POWER CAPACITY, FY2030
39%
820 GW Capacity FY 2030
Non-renewable Renewable
61%
Source: Central Electricity Authority, CW Research Note: Non renewables include coal, gas, diesel. Renewables include solar, wind, hydro, biomass & other sources
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F
CHART-10: COLO CAPACITY ACROSS NATIONS VERSUS MOBILE DATA CONSUMPTION
GROWTH DRIVERS: A COMPARATIVE ANALYSIS How does India compare with other nations on the DC market drivers? Key parameters that we that we believe as useful benchmas India against some of the key economies of the world: Colo installed capacity vs mobile data consumption Penetration of internet, smartphones, OTT, and social media The digital adoption growth story of India The pace of Colo capacity addition Construction cost for DCs
PetaBy / MW
13.2
0.3
4.5
1.1
18.8
0.8
2.8
0.1
0.4
0.3
Mobile data consumption (petaB/Month)
IT Load (MW)
8,150
16,000
7,150
14,000
6,150
12,000
5,150
10,000
MegaWatt
4,150
8,000
3,150
6,000
2,150
4,000 petaByte/Month
1,150
2,000
150
0
A review of all these parameters would begin the process of finding an answer to:
Why India needs to ramp up its Colo DC project delivery speed?
Is the ongoing capacity addition enough to mitigate the current problem of under penetration?
Australia
China
France
India
Indonesia
Japan
S.Korea
Singapore
USA
UK
Source: Cushman & Wakefield analysis
Why India needs to ramp up its Colo DC project delivery speed?
The PetaByte/MW ratio can be a considered a strong metric for understanding Colo data center penetration in any country. In this graph, India’s high PB/MW ratio suggests that the installed capacity is insufficient compared to other nations. Despite generating a large amount of data through mobile phones, India’s installed Colo capacity needs to be improved. More capacity is required to match up to nations such as China, which is the nearest comparable. To elaborate on the graph above: With approximately 13,000 Petabytes (PB) of mobile data generated through smartphones, India’s data generation is comparable only to that of another densely populated nation, China. However, with an installed Colo capacity of merely 977 MW (as of Q4 2023), 13.2 PB of data is being serviced in India for every 1 MW of installed colo capacity. In contrast, China’s PB/MW ratio is merely 4.5, indicating a much better DC market penetration. China has an installed Colo capacity of more than three times that of India. India’s PB/MW ratio is higher than that of most countries except Indonesia. Given the heightened delivery speed of upcoming Colo DC projects in India, the PB/MW ratio is expected to remain lower than in Indonesia, even though the latter will add substantial IT capacity over the forecast period.
In the previous chapter, we demonstrated that the addition of DC Colo capacity has been accelerating in India year after year. Despite this, India still needs to catch up with other comparable nations, where capacity addition has reached a healthy level relative to the amount of data generated through their internet or cell phone users. The metric used to measure or compare Colo DC penetration across countries is the ratio of data generation through mobile phones to the installed Colo capacity in the country. The total data generated is measured in Petabytes, and this ratio provides us with a PB/MW metric for evaluating the penetration of Colo data centers across countries. A lower PB/MW ratio would indicate that the penetration of Colo data centers is healthy and vice versa. We examined this ratio for prominent countries in both the advanced and emerging world, and it was not surprising to notice a significant potential for the growth of Colo capacity in India, Indonesia, and, to a lesser extent, China.
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OTT PENETRATION
SOCIAL MEDIA USER SHARE
Is the ongoing capacity addition enough to mitigate the problem of under-penetration? In 2023, India added 258 MW of Colo capacity, the highest recorded. Around 2.32 GW of projects are at various stages of construction or planned over the next five years (2024-2028). Thus, on average, India will be adding 464 MW of Colo capacity each year until 2028. While this may seem like a good delivery speed given the past trend, we believe that accelerating this pace could unlock significant opportunities for India’s data center and technology sectors. With the right speed, we can better cater to the anticipated rapid growth in technology usage and 5 G services, paving the way for a more robust and competitive industry. India will likely experience the fastest growth in the penetration of smartphones, internet usage, OTT subscriptions, and social media usage over the next five years. With the launch of 5G services in 2022, future applications that utilize generative AI and IoT will require much higher DC infrastructure support than is currently needed.
33%
30%
0% 20% 40% 60% 80% 100%
0% 20% 40% 60% 80% 100%
UK
UK
USA
USA
CHART-11: PENETRATION OF INTERNET, SMARTPHONES, OTT SUBSCRIBERS AND SOCIAL MEDIA: INDIA VS. OTHERS
INDIA
INDIA
CHINA
CHINA
JAPAN
JAPAN
FRANCE
FRANCE
S.KOREA
S.KOREA
INDONESIA
INDONESIA
AUSTRALIA
AUSTRALIA
SINGAPORE
SINGAPORE
Source: International Telecommunication Union (ITU), Global Data, Ormax, Meltwater, Statista, C&W Research
India has the lowest penetration of Internet, smartphones, OTT, and social media users among comparable countries. However, market estimates suggest India will likely witness steep growth in digital adoption, a significant data consumption driver. Interestingly, even after exhibiting such high growth in digital adoption until 2028, India will still have room to grow to reach the penetration levels observed in other countries. Both advanced, and leading emerging nations realize that applications utilizing 5G network services, generative AI, and IoT applications will generate a much larger quantum of data. Therefore, the existing installed Colo capacities could soon become insignificant. Consequently, all the comparable countries we have examined, including advanced nations such as the USA, Japan, and Australia, are further adding to their existing Colo capacities. With countries like the USA and China, which already have the highest Colo installed capacity, continuing to add more capacity, India will also have to double up on its project delivery speed.
INTERNET PENETRATION
SMART PHONE PENETRATION
CHART-12: INDIA’S DIGITAL ADOPTION TO WITNESS A MULTI-FOLD RISE
2022 2027F
47%
There is realization amongst both advanced as well as leading emerging nations that applications that use 5G network services, generative AI and IoT applications will generate much larger quantum of data. Therefore, the existing installed Colo capacities could soon be rendered insignificant. Consequently, all the comparable countries that we have been looking at are further adding to their existing colo capacities, including advanced nations such as the USA, Japan and Australia etc. With countries like the USA and China, which already have the highest Colo installed capacity, continuing to add more capacities, India too will have to double-up on its project delivery speed.
46%
33% 78%
46% 79%
30% 66%
0% 20% 40% 60% 80% 100%
0% 20% 40% 60% 80% 100%
47% 75%
UK
UK
USA
USA
INDIA
INDIA
CHINA
CHINA
JAPAN
JAPAN
FRANCE
FRANCE
S.KOREA
S.KOREA
INDONESIA
INDONESIA
AUSTRALIA
AUSTRALIA
0% 20% 40% 60% 80% 100%
SINGAPORE
SINGAPORE
Sources: International Telecommunication Union (ITU), Global Data, Ormax, Meltwater, Statista, C&W Research
Smart Phone Penetration
OTT Penetration
Social Media User Share
Internet Penetration
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DATA CENTER REPORT - 2024 | 23
Source: Department of Telecommunications, Ormax, Statista, C&W Research
CHART-13: AVERAGE COLO CAPACITY ADDITION (IN MW IT LOAD) EACH YEAR OVER THE NEXT FIVE YEARS (2024-2028)
Average annual IT capacity addtion (MW)
800
600
IN OUR STUDY, WE HAVE ESTABLISHED THE FOLLOWING SO FAR: India will see a significant rise in data consumption owing to a relatively faster rise in digital adoption—the penetration of smartphones, the internet, OTT users, and social media users. India’s current and forecasted Colo capacity additions are lower than most other nations. Regarding the PetaByte/MW metric for measuring Colo DC’s market penetration, India must catch up with the most advanced/emerging nations. In this chapter, we will estimate how much additional capacity will be required in India over the next five years to bridge the gap conservatively. We use two fundamental approaches to arrive at the shortfall: AN ASSESSMENT: INDIA’S REQUIRED DATA CENTRE CAPACITY HOW MUCH COLO CAPACITY ADDITION IS REQUIRED IN INDIA ON A MOST CONSERVATIVE BASIS? In the previous chapter, after examining the ratio of mobile data generation (in Petabytes) to the installed Colo capacity (in MW IT load), we established that India’s Colo data center market remains grossly underpenetrated. Additionally, we recognize that India will experience a significant rise in data consumption due to a faster penetration of smartphones, internet, OTT users, and social media users compared to other nations. The central question for the industry then becomes – how much additional capacity must India build over the next five years on the most conservative basis? We seek an answer to this question through two fundamental approaches: a) the Smartphone data consumption approach and b) the Internet penetration approach. These two approaches are chosen because they address the most basic triggers of data consumption. (A) Mobile data consumption approach and (B) Internet users’ penetration approach.
503
536
464
400
325
256
205
200
143
129
99
35
0
USA
S.KOREA
JAPAN
CHINA
INDIA
UK
AUSTRALIA
FRANCE
INDONESIA
SINGAPORE
While India’s average annual Colo supply addition stands just behind the USA and China over the forecast period, it is noteworthy that other mature markets, including Japan, Australia, and the UK, are already well ahead of India in terms of data center penetration. Moreover, Japan and Australia are also adding substantial capacity. Therefore, India must ramp up capacity addition further to bridge the gap. A mature ecosystem for IT and digitally enabled services, along with cheaper real estate, is enabling India to build data centers at the lowest cost compared to most other nations. The median price of constructing a data center in India is estimated at USD 6.8 million per MW of capacity, significantly lower than in most other APAC nations. We strongly believe India is poised to become one of the world’s largest data center hubs.
CHART-14: APAC DATA CENTER COST INDEX – 2023
AUSTRALIA
9.17
6.84
CHINA
HONG KONG
9.19
6.79
INDIA
INDONESIA
8.59
12.73
JAPAN
MALAYSIA
8.53
NEW ZEALAND
8.99
PHILIPPINES S.KOREA SINGAPORE TAIWAN VIETNAM THAILAND
4.59
11.23
9.23
7.45
6.15
6.70
0
2
4
6
8
10
12
14
Source: C&W Asia Pacific Data Centre Construction Cost Guide 2023/24
Low construction cost can put India in an advantageous position : A mature ecosystem for IT and digitally enabled services, along with cheaper real estate, is enabling India to build data centers at the lowest cost compared to most other nations. The median price of constructing a data center in India is estimated at USD 6.8 million per MW of capacity, significantly lower than in most other APAC nations. We strongly believe India is poised to become one of the world’s largest data center hubs.
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Disclaimer: We have used the metric petabyte/MW to compare the availability of data center installed capacity in India vs other countries. Please note that cloud firms self owned campuses are not included in this metric. MOBILE DATA CONSUMPTION APPROACH About the approach: The mobile data consumption approach is a relevant one for emerging economies as it looks at the potential rise in the demand for data in the near future mainly through smartphones. India is unique as it is a ‘mobile-first nation’, and smartphones become the primary driver of data. We believe, smartphone data consumption is a comprehensive tracker of data generation than other indicators such as OTT usage, social media usage etc., which might be more suitable for relatively advanced economies. We established in the Chart no. 10 above, India’s PB/MW ratio of 13.2 was better than that of Indonesia at 18.8 PB/MW, whereas India’s ratio trails behind most other countries including China. India performs better than Indonesia in terms of the ratio over the forecast period as well. While Indonesia is forecasted to have a PB/MW ratio of 9.1, India’s will be lower at 9.0. Therefore, the closest nation for India to aspire closing the gap with over the forecast period is China. Thus, China becomes the benchmark for our exercise. India’s current pipeline of under-construction and planned projects are lower than China in comparison and needs to be ramped up so that the nation can reach Colo penetration level similar to China (i.e. PetaB/MW ratio) over the forecast period. As of 2028, India is estimated to have 3.3 GW of total installed colo capacity (IT load), although it’s PB/MW ratio (at 9.0) will continue to remain lower amongst comparable nations, except that of Indonesia.
INTERNET USERS’ PENETRATION APPROACH
About the approach: The internet user penetration approach is the broadest measure as it would cover data consumption across all strata of consumers and across multiple devices. Here we look at population that currently has access to internet and compare it with the installed colo capacity in the country to check if internet users/ MW is at comfortable levels in India when compared with other nations. A smaller ratio would indicate better penetration of colo data centers among internet users, and vice versa. Disclaimer: We have used the internet users/MW to compare the availability of data center installed capacity in India vs other countries. Please note that cloud firms self owned campuses are not included in this metric. To test the analysis further to determine future colo capacity addition requirements, we have used yet another broad approach, i.e. the internet users’ penetration approach. Here we compare internet users in year 2023 with the installed colo capacity for the same year. Once again, a huge amount of under-penetration of colo capacity is visible in India, where 0.6 million internet user population in India are currently dependent on every 1MW of installed colo capacity. On the other spectrum is Singapore, where every 1MB of installed colo capacity exists for merely ~6,000 internet users. With an installed capacity of 188MW currently, Indonesia’s ratio (0.9 million) once again becomes the nearest gauge for India. Other countries, including China, are way ahead of India, in terms of internet users/MW ratio. In this case, Indonesia could have been considered as benchmark given that the country is also witnessing a substantial expansion of data centre capacity.
TABLE-2: DERIVATION OF PB/MW RATIOS FOR INDIA, INDONESIA AND CHINA (2023, 2028E)
TABLE-3: DERIVATION OF INTERNET USERS / MW OF INSTALLED COLO CAPACITY ACROSS COUNTRIES (2023, 2028E)
PB/MW Installed capacity
Mobile data consumption approach
Mobile data usage (GB/ user/mo)
% Share of smartphone users
Mobile data(P3/ Month)
Installed capacity (MW)
Population (mn)
Smartphone users (mn)
Installed capacity (MW) 2023
Country
Internet users (million)
Internet Users/MW
India 2023 19.5
46.5%
1,423
662
12,906
977
13.2
Australia
1043
25,381,547
24,335
India 2028F 29.3
66.0%
1,487
981
29,634
3,299
9.0
China
3208
1,040,740,087
324,420
present, India has lowest netration of Internet, martphones, OTT as well as cial media users amongst mparable countries. wever, market estimates ggest that India is likely witness a steep growth digital adoption, which a major driver of data nsumption. Interestingly, en after exhibiting such h growth in digital option until 2028, India l still have room to grow to ach the penetration levels at is observed in other untries. China 2023 14.1 China 2028F 21.2 Indonesia 2023 16.0 Indonesia 2028F 24.0
71.8%
1,412
1,014
14,293
3,208
4.5
France
632
56,000,000
88,608
82.8%
1,404
1,163
24,592
5,721
4.3
India
977
657,168,725
672,639
80.2%
275
220
3,527
188
18.8
Indonesia
188
172,071,156
915,272
90.1%
287
259
6,212
682
9.1
Japan
1133
102,334,446
90,322
Singapore
677
5,473,398
8,085
is likely to reach 3.3 GW only. Therefore, India will have to add 3.6 GW of additional Colo capacity into the future project pipeline over and above the 2.32 GW already in various stages of construction and planning. Therefore, the data centers segment will require a bigger focus from operators, investors, and regulators in the near-to-medium term.
If India was to mitigate the gap with China, which is taken as benchmark for our exercise, it should aim to reach a target PB/MW ratio of 4.3 by 2028 (equivalent to China for the same year). For that to happen, India will need a total installed Colo capacity of 6.9 GW. Looking at the current pipeline of under-construction and planned colo DC projects, India’s installed capacity
South Korea
473
50,748,378
107,290
UK
1202
65,704,698
54,663
USA
8201
312,796,838
38,141
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DATA CENTER REPORT - 2024 | 27
DISCLAIMERS ON THE ABOVE HYPOTHESIS:
Installed capacity (MW) 2023
Country
Internet users (million)
Internet Users/MW
Our analysis using the above two approaches concludes by reinforcing the potential growth that the Indian data centre industry could potentially achieve over the medium term. However, our analysis considers a robust growth (based on available market stats) in India’s digital penetration rates and further expansion of the digital penetration, which would increase data centre demand manifold. It is possible that our analysis might get affected by the following factors:
Australia
2321
26,645,900
11,480
China
5721
1,165,569,000
203,735
France
1278
62,000,000
48,513
India
3299
1,011,010,400
306,460
Indonesia
682
232,704,900
341,210
Japan
2748
113,590,200
41,336
Singapore
853
5,587,200
6,550
It is possible that expansion of 5G networks remains lower than what market has been estimating. This could impact the rate of data consumption going forward as well as demand for data centers.
We also assume continuous improvement in support infrastructure such as fibre network and power supply. For instance, a nationwide fibre optics project is currently underway. In case, there are delays in fibre optic rollout that could impact digital services take-up, it would hinder potential data centre demand.
South Korea
1186
50,332,800
42,439
UK
2228
67,200,000
30,162
USA
10883
321,188,600
29,513
Source: International Telecommunication Union (ITU), country telecommunication ministries, C&W Research
However, given the current pipeline of under-construction & planned colo projects worth 2.32GW, India will have
nearly 3.3 GW of colo capacity as of 2028 and that would still render its internet users per MW ratio as the weakest
Global hyperscalers such as AWS, MS Azure is moving ahead with major captive cloud centre projects. This could potentially impact the colo data centre demand to some extent given that hyperscalers account for a significant proportion of colo demand at present.
Expansion of AI is driving growth of data centre across many countries across the world, this will possibly be a major growth driver in India as well in the upcoming years. This will also lead to higher power requirement which means robust uninterrupted power supply will be crucial going forward. In case, the power supply is inadequate that could affect data centre demand.
amongst global peers, except Indonesia. Therefore, India should aim to bring the ratio down to 203,735 people
per MW, equivalent to that of China’s market estimate for 2028. If we were to target that, India would need at least
1.7 GW of additional colo capacity creation over and above the currently visible pipeline of projects as per this
approach. Using both the above approaches (i.e., mobile phone data and internet users’ population) it can be said
that India’s DC market needs substantially higher investments and participation from various stakeholders. There is
a need to commission 1.7 – 3.6 GW of additional colo capacity, over and above the current under construction and
planned pipeline, on a conservative basis. Without this, the opportunity for Indian economy to capitalize on the
growth story around digital adoption could be restricted to some extent, and the domestic colo industry could lose
a chance to become a hub for the wider geography.
While India economic outlook remains healthy over the medium term, in the event of any economic slowdown due to domestic or global factors, digital spending by consumers could be affected. This could lead to a slowdown in data centre demand.
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Superior digital infrastructure drives Mumbai’s Data center leadership MUMBAI
CONCLUSION The Indian economy and real estate sector have benefited significantly from the ongoing growth story around digital adoption. Not only are the IT-BPM sector and Global Capability Centers (GCC) gaining momentum in the country, but there is a host of other related drivers that are causing demand for real estate to grow exponentially. The country is experiencing high growth in the adoption of internet services, smartphones, social media, and OTT channels. The consequent demand for secure data storage is, therefore, culminating in high interest in the data center space. Over the last 3 to 4 years, with each passing year, the country has seen incremental growth in Colo data centers’ capacity addition. With the current pipeline of under-construction and planned Colo DC projects, the annual capacity addition is only going to rise further over the years. Despite a steep rise in the capacity addition of Colo data centers foreseen over the coming years, we believe that the supply is coming in slow. The Colo capacity addition foreseen in India for the coming 5 years averages around 464 MW per annum, which is lower than advanced Colo markets such as US and China. Besides, with 5G roll-out expected to double data consumption per mobile phone user, and with the increasing penetration of internet, smartphones and online media, the gap between the speed at which data is getting generated and available data storage capacity is only seen widening in the near future. At some point, this should affect growth of digital adoption in the country, given the prevailing policy environment around data protection or data localization. A benchmark analysis of India’s future capacity addition versus that happening in other parts of the world suggests that India will have to ramp -up investments to create a lot more capacity, over -and -above the current pipeline of projects. This increase in investment is also relevant considering the increasing demand for AI that is expected to further augment overall demand of DCs across the world. We have used two fundamental approaches to estimate the potential requirement of DC capacity in the country over next 5 years (until 2028) – the mobile data consumption approach and the internet user penetration approach. Using both the approaches, it can be estimated that by 2028, if India’s benchmark ratios reach close to just those of China, India would need close to 5 GW – 6.9 GW of total installed Colo capacity. Most other countries when compared to India, except Indonesia, have a healthier ratio and deriving demand from them would increase and skew the demand numbers. With current installed Colo capacity of 977 MW and under-construction or planned capacities of 2.32 GW, India will have not more than 3.3 GW of Colo capacity by 2028. To meet the potential total requirement of 5 – 6.9 GW based on our analysis using both the approaches, India will have to commission around 1.7 – 3.6 GW of additional Colo projects over and above the under construction and planned ones currently. Therefore, there is a lot of room for existing players to expand as well as newer players to enter the market in the near-to-medium term.
ANNEXURE I:
IT LOAD (MW) 1217 IT Load to be added by 2028
1217
Mumbai is one of the premier data centre locations not just in India but in APAC The city currently has over half of India’s data centre capacity and over 500 MW of capacity is expected to be added in next 5 years Superior digital infrastructure including 12 cable landing stations and good fibre connectivity has attracted large global operators; the city continues to see healthy demand from hyperscalers MIST cable was landed in Mumbai in early 2023, 5 more cable landing stations are under construction Demand for right type of land at key data centre hubs is strong though issues such as land titles, power supply etc have cropped up on certain occasions
•
•
250
319
380
531
531
2020 2021
2023 2028F
2022
•
379
H2 2023
•
360
H1 2023
TOTAL OCCUPANCY (MW)
•
331
H2 2022
H1 2022
310
TRANSACTION DETAILS (RACK SPACE DETAILS) – 2023
4%
City
Tenant
Power
5%
Mumbai
PayTM
350 Kw
6%
Mumbai
IBM
300 KW
5%
55%
Mumbai
Bandhan Bank
200 KW
Mumbai
Optiver
50 KW
10%
Mumbai
Canara Bank
1 MW
15%
Union Bank of India
Mumbai
1 MW
Mumbai
Bank of India
1 MW
Tenant Categories -H2 2023
Cloud BFSI IT & Telecom Manufacturing
E-Commerce Media & entertainment Others
Racks as of H2 2023 70,000
Colo vacancy 28%
Key data centre hubs: 1. Thane-Belapur Road 2. Rabale 3. Chandivali
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