Big Shifts: Data centres gear up for the next phase of growth

India’s data centre ecosystem is undergoing a significant transformation, driven by rapid digitalisation, growing enterprise and hyperscaler demand, and the surge in artificial intelligence (AI) workloads. Sukrit Anand, Vice President, Investment and Strategy, Digital Connexion; Kirtikar Ojha, Chief Marketing Officer and Government Business Head, L&T-Cloudfiniti; and Ganesh Pawar, Director of Operations – India, Equinix, offer their perspectives on how India’s data infrastructure is gearing up for the next phase of growth. Key takeaways from their addresses…

Sukrit Anand

The data centre industry has evolved dynamically over the past five years. Capacity has almost doubled, and the CAGRs have been over 30 per cent. Today, it has become a favoured sector for real estate private equity and investors. In the next three to five years, this industry is expected to see exponential growth, largely driven by the increasing demand for AI and cloud.

A primary focus for Digital Connexion (a joint venture between Brookfield, Digital Realty and Reliance Industries Limited) has been access to power, which could become a bottleneck over the next two to three years. Digital Connexion has an in-house green power portfolio of almost 20 GW, which will be leveraged to serve its customers.

Further, Digital Connexion is currently building approximately 140 MW of capacity across Chennai and Mumbai. Its vision is to create a best-in-class infrastructure layer that caters to large-scale and enterprise customers. It aims to provide enterprise customers with the same level playing field and infrastructure capabilities that large-scale customers enjoy.

The company is continuously tracking the enterprise market and observing how demand is evolving. This is where significant growth potential lies. At this point, the core metro markets are driving most of the demand. Particularly, Digital Connexion is keeping a close watch on Tier II cities and edge locations. In Chennai, a 20 MW facility is already operational, and we have another 40 MW currently under development in Mumbai. The Mumbai data centre is actually located in the heart of the city, in Chandivali. The goal is to bring computing as close to the end-use cases as possible, where users are situated, enabling the delivery of low latency solutions. While the company is exploring opportunities in the edge data centre space, its primary focus remains on the core metro markets.

Digital Connexion’s data centres are designed to support everything, from small cloud or network deployments to GPU-based deployments that enterprises may require. Presently, the company is testing high-density deployments, going up to 100 kW per rack. It also aims to bring globally established, best-in-class technologies to India, making them accessible to Indian enterprise customers.

Kirtikar Ojha

The evolution of the data centre business has brought about a significant shift. Initially, the focus was largely on providing physical space and power. However, it soon became evident that pure colocation services were as lucrative, prompting many players to diversify into managed services and cloud offerings. Some companies even launched their own cloud platforms but found limited traction, leading them to pivot towards reselling hyperscaler services instead. As a result, the colocation model has now largely transitioned to cloud, with the top few hyperscalers becoming the largest consumers of space and power. This change has significantly altered business models, placing a strong focus on large-scale customers. Further, as fintech grows and financial inclusion initiatives like the Jan Mantri Jan Dhan Yojana take root, public sector banks, in particular, are driving the demand for edge data centres.

Reflecting on the evolution of cloud computing, about a decade ago, there was a steady rise of services like infrastructure-as-a-service, platform-as-a-service and software-as-a-service. Today, L&T-Cloudfiniti has a diverse portfolio spanning multiple sectors, from semiconductors to hydrocarbons, real estate and construction. L&T has also constructed data centres for various smart city initiatives, the Indian armed forces, state governments and private data centre operators. L&T-Cloudfiniti primarily serves large enterprises and has made a conscious decision to build a Make in India system. It is not collaborating with hyperscalers on certain projects.

L&T-Cloudfiniti also works with micro, small and medium enterprises (MSMEs) by providing them with AI platforms. Through its GPU-as-a-service offering, the company encourages businesses to forgo investing in GPU servers and instead leverage its GPU platform.

As a country, India must recognise that research and development is not its strongest suit, which is a critical factor for future innovation. That said, a significant opportunity now exists to change this trajectory. AI today is at a stage comparable to where cloud computing was 13-14 years ago. Back then, chief information officers were cautious about cloud, preferring to see physical servers in their data centres. Over time, they took a leap of faith and moved to third-party data centres, and subsequently transitioned to cloud. AI has significantly democratised technology. It has opened up new avenues for differentiation. The key is in solving problems, whether they are national, regional, enterprise-level, or even specific to MSMEs.

Given the increasing emphasis on data localisation by the Indian government, L&T-Cloudfiniti identified a significant opportunity and entered this domain. The company’s data centre in Chennai, for instance, is equipped with a 30 MW IT load capacity, and it also has a smaller facility in Navi Mumbai. It has plans for further expansion, with upcoming investments in Hyderabad, Bengaluru, Noida and other parts of the country.

The cost of building data centres is often high, raising questions about their monetisation. However, this process will unfold at its own pace. While the Indian government is actively promoting Tier II and Tier III cities, enterprises are still focused on large cities. Initially, data centre locations were chosen based on the availability of cable landing stations, which is why Mumbai and Chennai were important. However, now, with the availability of fibre and modern network technologies, latency has decreased, opening the door for smaller data centres in emerging cities. L&T-Cloudfiniti is also planning its edge deployment to capitalise on these opportunities.

While L&T-Cloudfiniti will continue to build data centres, it will shift its focus towards the GPU-as-a-service model. It has already invested in a company that offers both CPU and GPU services, and is creating an integrated platform where customers can have a unified view of their CPU and GPU deployments. It is also exploring international technology, bringing in external expertise for GPU-based modelling. For tasks like fine-tuning and inferencing, the company is looking to integrate additional platforms. The key to success is smart investment, not solely investing in GPUs. There are other technologies for tasks such as model fine-tuning and inferencing that are equally important. Looking ahead, AI is set to shape the future, and businesses must adapt by integrating solutions across co-location, telecom, cloud and AI. This is the direction L&T-Cloudfiniti is heading in, with AI poised to transform multiple industries.

Ganesh Pawar

Equinix currently operates 268 data centres across 74 metros in 35 countries. In India, it began investing significantly in 2021. As of now, it has three operational data centres in Mumbai. It is also preparing the launch of a new facility in Mumbai with a capacity of 4,200 racks, as well as a Chennai facility that will support approximately 5,000 racks.

According to an industry report, India’s data centre capacity is expected to reach 3.5 GW by 2030. However, there is still a projected deficit of over 1 GW. To help address this gap, Equinix intends to increase its presence in additional cities across the country. Currently, it has five operational data centres in India.

Equinix serves a diverse set of customers, including retail enterprises and organisations from sectors such as finance, retail, telecom, government, transportation and education. The company’s key offering is its digital interconnection services, which allow customers to connect securely and efficiently across the globe.

In addition, it also operates a hyperscale business line known as X-Scale. These are large-scale, custom-built data centres designed to meet the requirements of clients needing facilities in the range of 60 MW or more. Through this model, Equinix supports both enterprise retail customers and large hyperscalers, offering a comprehensive mix of solutions.