Is India Building Enough To Power Its Digital Transformation

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

30 | CUSHMAN & WAKEFIELD

DATA CENTER REPORT - 2024 | 31