Data Centre market to attract investments upto Rs. 1.20 lakh cr in next 5 years: ICRA

Rapid digitisation and favourable regulatory regime is going to propel demand for data centres. The Indian data centres market is witnessing healthy growth primarily driven by large hyper-scalers like Amazon web services, Google, Microsoft, Facebook, IBM, Uber, Dropbox etc. who are outsourcing their storage needs to third party Data Centre providers. To cater to the increasing demand, Indian corporates like the Hiranandani Group, Adani Group; foreign investors like Amazon, EdgeConnex, Microsoft, CapitaLand, Mantra Group have started investing in Indian Data Centres. Along with them, existing players like NTT, CtrlS, Nxtra, ESDS, STT India are also expanding their capacities. Overall, 3900-4100 MW of capacity involving investments of Rs. 1.05 – 1.20 lakh crore are likely to get added in the next five years. Experts say, “The favourable regulatory support, rapidly growing cloud computing, increasing internet penetration, Government’s effort on digital economy, adoption of new technologies (IoT, 5G etc), growing needs of hyper-scalers are some of the major factors driving the demand for data centres in the country. The sector is likely to witness a five-fold increase in capacities in the next five years. In addition, the Government of India accorded infrastructure status to the data centres in the Union Budget 2022-2023. The IT ministry has plans to offer incentives worth up to Rs. 15,000 crore under a national policy framework for Data Centres. This includes an incentive of 4-6% if the components (IT hardware and power) are procured from Indian manufacturing units and incentive of up to 3% for use of renewable energy. This will enable the players to get access to longer tenured debt at competitive rates and access to foreign funding through the external commercial borrowing route.”

The industry revenues are expected to increase at a CAGR of around 18-19% during FY2022-FY2024 supported by increase in rack capacity utilisation and ramp-up of new Data Centres. W

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