India's data centre industry is on the cusp of exponential growth, with its total capacity projected to increase fivefold to 8GW by 2030, according to a recent report by Jefferies. This surge is attributed to rising data traffic, increased adoption of artificial intelligence (AI), the need for lower latency, and regulatory pushes for data localization. To achieve this ambitious target, the sector will require an estimated capital expenditure of $30 billion, which is expected to drive data centre leasing revenues up five times to $8 billion by the end of the decade.
The demand for data centres in India has seen a sharp rise, spurred by a 30-fold jump in data traffic since FY17. As of now, India's colocation data centre capacity has already increased fivefold to 1.7GW, with high occupancy levels at 97%, indicating that demand is outpacing supply. Mumbai and Chennai together account for nearly 70% of the installed capacity, with Mumbai alone holding about half, given its proximity to undersea cable landing stations and the concentration of banking and financial clients.
Several major players are expected to dominate the data centre landscape in the coming years. By 2030, Bharti Airtel, Reliance, and AdEnterprises (through AdaniConneX) are projected to collectively account for 35-40% of India's data centre capacity, with AdaniConneX and Reliance leading roughly one-third of the planned capacity additions. The top five players currently hold a 90% market share, led by NTT GDC with approximately 20%. Indian conglomerates like Reliance are planning significant investments, including a 3 GW data centre in Gujarat with an investment of around USD 20-30 billion. AdaniConneX, aims to develop 1 GW of data centre capacity over the next 10 years.
The growing adoption of AI technologies is expected to further accelerate demand, as AI servers consume five to six times more power and require advanced liquid cooling systems compared to traditional setups. Regulatory developments such as the Digital Personal Data Protection (DPDP) Act, 2023, and RBI's data localization guidelines are also driving enterprises to host and process data within India.
This projected $30 billion capex will open opportunities across multiple sectors, including real estate, construction, and technology. The increasing data centre capacity is also expected to benefit power transmission and distribution companies, as power-linked costs make up about 30 percent of the costs incurred in setting up and running a data centre.
India's data centre capacity is growing at a compound annual growth rate (CAGR) of 50 percent and should be able to meet six percent demand by 2030 from less than one percent currently. While this growth is significant, it's worth noting that Europe's data centre capacity is more than 10 times the size of India's, despite India having a larger internet user base.
