Is India Building Enough To Power Its Digital Transformation

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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