Is India Building Enough To Power Its Digital Transformation

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.

24 | CUSHMAN & WAKEFIELD

DATA CENTER REPORT - 2024 | 25