Crisil report: India’s data center capacity will more than double by FY2027

New Delhi [India]December 23 (ANI): India’s data center industry will more than double its capacity to 2-2.3 GW by FY27 due to increasing digitization of the economy, Crisil Ratings claimed on Monday. Enterprises are increasingly investing in cloud storage.

Additionally, rising penetration of generative artificial intelligence (GenAI) is expected to drive demand in the medium term, according to the rating agency. The rapid development of GenAI, which requires higher computing power and low latency than traditional cloud computing capabilities, will also power the demand for Indian data centers.

The rating agency asserts that the industry can expect healthy and stable cash flows, which will keep players’ credit profiles stable.

A data center is typically a large group of network servers used by organizations to store or distribute large amounts of data remotely. Data localization initiatives are expected to trigger investments in data centers, in addition to incentives for states to attract such investments.

Data centers serve computing and storage infrastructure needs, which are driven by two main drivers.

First, enterprises are rapidly moving operations to digital platforms, including the cloud, a trend that has accelerated in the wake of the Covid-19 pandemic.

Second, increased accessibility to high-speed data has led to a surge in internet usage, including social media, OTT platforms, and digital payments.

According to Crisil, mobile data traffic has grown at a compound annual growth rate (CAGR) of 25% over the past five fiscal years. It will be 24 GB per month at the end of fiscal year 2024 and is expected to increase to 33-35 GB by fiscal year 2026.

“To meet growing data center demand, investments $Rs 55,000-65,000 crore is required over the next three financial years, mainly for land and buildings, power equipment and cooling solutions. Data center operators typically build infrastructure—land and buildings, which account for 25-30% of overall capital expenditures—and anticipate future collaborations. ” said Manish Gupta, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings.

Capacity additions are driven by expansion plans by existing players as well as entry of new players. These are based on the huge needs of very large-scale enterprises. By definition, hyperscale data centers are large data centers that provide cloud computing and data solutions to enterprises with extensive digital infrastructure needs. (Arnie)