Is India Building Enough To Power Its Digital Transformation

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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