India must add 1.7-3.6 GW data centre capacity to its 2028 target: Report

Owing to a huge amount of data being generated in the country amid rapid digital adoption, India would require an additional colocation data centre capacity of 1.7–3.6 Gigawatts (GW) by 2028, over and above the planned development of 2.32 GW, a report released by real estate consultancy Cushman & Wakefield on Wednesday revealed.

The report titled "Is India Building Enough to Power its Digital Transformation?" noted that India's data generation, particularly through smartphones, is very high compared to other major countries. At the same time, there is low internet and smartphone penetration.

A colocation data centre, also known as a "colo," is a facility where businesses can rent space to house their servers, networking equipment, and storage devices. It provides the physical infrastructure to ensure the servers and equipment are secure, powered, and connected to high-speed networks.

 

The findings of the report said that for every 1 Megawatt (MW) of installed colocation capacity in India, 13.2 petabytes (PB) of data is generated. In the USA, this ratio stands at 0.3 PB, in the UK it is 0.4 PB, and 0.3 PB in Australia. In Singapore, it is lower at 0.1 PB, the report said.

In China, comparable with India in terms of population, data generated per 1 MW of colo capacity stands at 4.5 PB.

This speed of data generation in India is likely to increase in the next five years.

"India will likely experience the fastest growth in the penetration of smartphones, internet usage, OTT subscriptions, and social media usage over the next five years," it said, adding that 5G network services, generative artificial intelligence, and Internet of Things applications would increase it further. It would require a considerably higher quantum of installed data centre capacity.

It does not mean that India has not made any progress in developing data centres. According to the data, India’s colocation data centre capacity stood at 977 MW across the top seven cities as of December 2023. Around 258 MW out of this was built in 2023 - 105 per cent higher than the capacity installed in 2022.

India's current under-construction colocation capacity addition stands at 977 MW. With another 2.32 GW being planned, the total capacity is projected to touch 3.29 GW by 2028.

However, the report said that to close the gap with the closest comparable nations, India would need to take this total to 5–6.9 GW. So, there is a need for India to add another 1.7 to 3.6 GW to its ongoing capacity addition.

"Without this, the opportunity for the Indian economy to capitalise 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," the report said.

It also highlighted that setting up data centres in India is cheaper than in its peers owing to a mature ecosystem for information technology, digitally enabled services, and cheaper real estate.

The median price of constructing a data centre in India is estimated at $6.79 million per MW of capacity. It is significantly lower than other Asia-Pacific nations like Japan ($12.7 million), Singapore ($11.23 million), South Korea ($9.23 million), and Australia ($9.17 million). It is also marginally cheaper than $6.84 million in China.

"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," it said.

"We strongly believe India is poised to become one of the world’s largest data centre hubs."