According to a report by Crisil Ratings, India’s data centre capacity is set to more than double to 2-2.3 gigawatt (GW) by 2026-27, led by increasing digitalisation as organisations increase their investments in cloud storage.
According to the report, the mobile data traffic has experienced a compound annual growth rate (CAGR) of 25 per cent over the past five fiscal years, reaching 24 GB per month by the end of fiscal 2024, with expectations to rise to 33-35 GB by fiscal 2026. The rapid evolution of Gen AI, which demands greater computational power and lower latency than conventional cloud computing, is anticipated to further stimulate data centre demand in India.
To address the surging demand for data centres, an investment ranging from Rs 550 to Rs 650 billion will be necessary over the next three fiscal years, primarily for land acquisition, construction, power infrastructure, and cooling solutions. Capacity expansions are being driven by both existing players and new entrants into the market. Incremental capital expenditure will increasingly rely on debt funding, leading to a moderate rise in overall debt levels.
The report further added that once capacity is secured, data centres can enjoy predictable cash flows supported by a stable client base, resulting in low customer churn rates. This stability is largely due to high switching costs for clients stemming from their investments and potential business disruptions associated with changing providers.
