India’s data centre industry is expected to close the year with a robust demand growth, with estimated absorption in the range of 150-170MW. This growth can be attributed to the delivery of pre-committed supply to hyperscale cloud service providers (CSPs), according to a report by property consultant Jones Lang LaSalle (JLL), The 2022 story: Indian real estate’s rise from the lows.
Colocation operators are scaling up construction to meet their delivery targets. Some operators are retrofitting existing buildings to reduce the time of delivery, the study said.
It added that supply has been mostly concentrated in Mumbai due to submarine cable connectivity, power availability and a large user market. As 2022 comes to an end, the supply is expected to exceed 2021 levels by a healthy margin.
“The Indian data centre industry is expected to add 681 MW capacity by the end of 2024 leading to a doubling of capacity to 1,318 MW which will need 7.8 million sq ft of real estate space. Mumbai is expected to account for 57 percent of the new supply followed by Chennai at 25 percent. Increasing digitisation is expected to save costs and make organisations resilient in times of uncertainty which will be one of the key drivers of data centres’ growth in India. The impact of 5G rollout, personal data protection legislation and investment incentives is expected to drive multi-year growth of Indian data centres,” said Rachit Mohan, Head of Data Centre Advisory, India, JLL.
"Public service cloud providers continue to see double-digit demand growth driven by the increasing use of digital services by BFSI, manufacturing, public sector, media, gaming, etc. In turn, this is expected to drive increasing demand for the data centre industry,” he added.
BFSI is short for Banking, Financial Services and Insurance.
Climate change and sustainability objectives
Like other industries, data centres have experienced global disruptions, both man-made and natural, the report said.
It added that climate change has been at the doorstep with a sharp rise in temperatures leading to unprecedented drought-like conditions in Europe. On the other hand, some countries have faced high rainfall, posing an operational challenge for existing data centres.
This, coupled with supply chain disruption caused by the geopolitical crisis involving Russia and Ukraine, has added to the complications.
The disruption in the supply of of sources of power generation like crude oil and gas has led to a rethink among data centre players in setting up capacities. The impact of these outages, especially due to sustainability issues, is likely to result in a shift of data centre operations to other locations.
India, with its vast geographical resources, thrust on renewable energy, increasing submarine cable connectivity and cost competitiveness is likely to emerge as an alternative data centre hub.
Future trends
The report said the 5G network is likely to increase data download speeds in India 10 times; a proliferation of smart devices will contribute to the explosive data growth, it said.
5G is projected to account for almost 40% of India’s mobile subscriptions – 500 million – by the end of 2027 with average data usage of 50 GB per month
Supply chain disruptions and a shortage of skilled manpower are likely to push up construction costs. The global geopolitical crisis has adversely impacted the availability and prices of key energy inputs required for production and logistics, leading to inflation across the value chain.
Supply chain disruption has also led to a shortage of hardware required for the functioning of data centres, the report said.
Even so, increasing digitisation will drive data consumption exponentially. According to the report, digital payments volume jumped by 64% to 72 billion transactions in FY 2021-22 from 44 billion in FY 2020-21.
Also Read: India's data centre market to see USD 20 billion cumulative investment by 2025: CBRE
Over-the-top (OTT) video streaming market saw a sharp rise in its paid subscriber base to an estimated 70-80 million in 2021 from 14 million in 2018—5X growth in three years. 5G-driven growth is expected in online gaming, augmented reality and digital commerce.
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