The digital push

The Indian data center market is poised to grow further in the coming years on the back of digitalization push across the industry segments. Construction Times presents the market trends.

The Indian data centre industry has grown from 2.7 million sq ft in 2017 to 11 million sq ft in 2023, according to market research reports. As many as 45 new data centres covering 13 million sq. ft and 1,015 MW of capacity are expected to come up by the end of 2025. India's digital revolution and rising demand for data-intensive services are fuelling the country’s data center market and as a result we can witness a remarkable growth trajectory of data center market in India. The government has also been proactively supporting the development of 5G and the Internet of Things (IoT) that can handle the rapid data transfer and minimal latency demanded by these technologies.

Market scenario

The data center market in India is growing significantly, fuelled by India's growing digital economy, with over 880 million internet users generating copious amounts of data that require robust storage and processing infrastructure. The growing digitalisation specifically the 5G, Internet of Things, and Machine Learning has further catalysed the demand for data centers, enabling a multitude of data-intensive applications across various sectors. The emergence of e-commerce, over-the-top (OTT) media platforms and cloud services has significantly contributed to the surge in data center demand. “With hyperscale cloud providers driving a substantial portion of this demand, the market is witnessing a proliferation of large, high-capacity data centers exceeding 20 MW,” says Vipin Jain, President, Datacenter Operations, CtrlS Datacenters.

Currently, India is already ahead of Japan, Hong Kong, Singapore, Australia, and South Korea with respect to installed capacity of the data centers. Government initiatives like Digital India and the proposed data center policy are adding to this growth. In light of this increased demand, major global data players like Google, Microsoft, Amazon, along with other MNCs are looking to have their data localisation demands met in the country.

Digitisation and rise in the demand for cloud-based services have attracted the demand for data center from across the industries, with IT and telecom holding the largest share.

According to Sanjay Singhania, Managing Director, EPACK Prefab, the market size reached US$4.5 billion in 2023, expecting to reach US$11.6 billion by 2032, with a CAGR of 10.98%. This goes to show that the Indian data center market presents a highly promising scenario with substantial growth potential.

The government's Digital India initiative, the expansion of e-commerce, revolution in telecom industry, technology advancements and the uptake of cloud computing are some of the reasons propelling the data center market in India, according to Singhania.

“Last two decades of India has been the decades of mobile and the upcoming two decades will be known as the data era. Technologies like Regenerative AI, Cloud Services, and transition to 5G networks will be resulting in an unprecedented surge in data consumption,” says Harihans Singh, Sr. Sales Manager – Commercial building services (INDO Region), HVAC & Data Center, Grundfos Pumps India Pvt Ltd.

Growth trends

According to Jain, the rise of cloud computing has driven substantial investments in hyperscale data centers, leading the Indian Government to implement critical policies to support industry growth. “By granting infrastructure status and introducing the Data Centre Incentivization Scheme (DCIS), the government has facilitated easier access to credit and provided various incentives. Ensuring a reliable supply of electricity and robust connectivity backhaul has created a favourable operating environment. Additionally, specialised building codes, the establishment of Data Centre Economic Zones (DCEZs), and proposed measures such as integrating data centers into legislation and creating Data Centre Facilitation Units (DCFUs) have streamlined processes further,” he adds.

Singhania is also on the same page saying, “The government has recognised the economic benefits of investing in the infrastructure of data centers, which includes attracting global investment and generation of direct and indirect employment. The focus on developing data centers is also in tandem with the government's push for initiatives like Digital India and Smart Cities Mission, which is eventually creating a massive need for data storage and processing capabilities.”

The government has been working on laying out a ‘National Data Center Policy,’ which will focus on uninterrupted power supply since and faster building clearance. This policy is also expected to address environmental, social, and governance (ESG) aspects. This could incentivise sustainable data center practices and attract investments in eco-friendly facilities.

Building data center is challenging

Establishing new data centers involves addressing multifaceted infrastructure challenges. Jain elaborates, “Securing suitable land parcels that meet specific requirements, such as proximity to power grids, internet connectivity, and cooling sources, can be a significant hurdle. Navigating complex zoning regulations and obtaining necessary permits from local authorities can further complicate the land acquisition process. Energy efficiency and sustainability are also paramount concerns, necessitating innovative cooling solutions, renewable energy integration, and eco-friendly practices. Ensuring robust power infrastructure, including reliable supply and backup systems, is crucial for uninterrupted operations.”

Apart from these, there are also physical security measures such as access control, surveillance, and fire suppression systems, that are imperative to safeguard sensitive data and equipment. Furthermore, adhering to industry standards, regulatory compliances, and data privacy regulations is a vital consideration in data center infrastructure design and implementation.

Market outlook

As per market reports, the country now ranks 14 with 151 data centres. Going forward, data centre capacity in the country needs to grow much more, given the increasing use of digital services and the need for data storage and processing capabilities.

According to Jain, the data center market presents significant opportunities for growth and innovation. The increasing demand for digital services, cloud computing, and data-intensive applications is driving the need for robust, scalable, and efficient data center infrastructure solutions. Key opportunities in this space include the development and deployment of advanced cooling systems, uninterruptible power supplies, and intelligent power distribution systems to support high-density computing environments while optimising energy efficiency. Additionally, there is a growing demand for modular and scalable data center designs, enabling organisations to expand their infrastructure seamlessly as their needs evolve. The integration of software-defined networking (SDN) and data center infrastructure management (DCIM) solutions is also gaining traction, allowing for improved connectivity, automation, and real-time monitoring of data center resources.

Singh adds, “Going forward, data centers will witness a significant change towards more environment-friendly and sustainable design to help reducing the carbon footprints. The emerging trends like new-age cooling systems (e.g., Distributed Pumping System for Chilled Water System/Air Cooling and Liquid Cooling technology), renewable energy sources, and implementing green technologies is helping the data center to have substantial cost savings along with positive effects on the environment.”