Sharad Agarwal, Chief Executive Officer, Sify Infinit Spaces Limited
The Indian data centre (DC) market is experiencing remarkable growth, driven by increasing digitalisation, the growing adoption of artificial intelligence (AI) and internet of things (IoT), and rising demand in Tier I cities. Several players, big and small, are looking to leverage the Indian data centre opportunity. While existing players have embarked on large-scale capacity additions, several new entrants are developing significant capacity. Industry leaders discuss key trends and emerging focus areas in the DC space…
How would you assess the growth of the Indian DC market in the past five years? What have been the key drivers?
The Indian DC market has witnessed a 24 per cent CAGR over the past five years, positioning the country as a key player in the global DC market, driven by strong demand in Tier I cities with robust infrastructure and connectivity. Some of the key growth drivers are cloud adoption, digital content surge and technological advancements.
We expect further acceleration driven by two key factors. First, the regulatory push – with the Digital Personal Data Protection [DPDP] Act set to be operationalised, financial regulators are indirectly driving the growth of DCs. Second, 5G penetration – the nationwide roll-out of 5G has transformed the digital ecosystem, leading to increased data consumption and bringing advanced edge DC infrastructure closer to end-users to support high speed, low-latency services. This sustained growth underscores India’s pivotal role as a global DC hub, driven by digital transformation and regulatory initiatives.
How are customer demands changing with the emergence of AI and edge computing? How are DC operators addressing these changing requirements?
We have not yet seen the promised AI-driven growth in India. Much of the training loads are concentrated in China and the US. We expect mass implementation to come to India soon and we are preparing for AI-ready design and build changes.
Evolving customer demands are reshaping infrastructure requirements, necessitating buildings that can support heavier loads and increased cooling capacity. At the same time, sustainability concerns are driving a greater emphasis on renewable energy to meet AI-related power needs.
With increased volume and energy density, infrastructure has become much more critical. Therefore, the tolerance for failure has significantly decreased, with customers expecting greater accountability.
What has been the progress on the sustainability front?
With the rapid expansion of enterprise DCs in India, the adoption of sustainable practices has become essential. Sify is committed to reducing its carbon footprint by integrating green energy and optimising infrastructure efficiency.
Current efforts in India are focused on maximising renewable energy adoption and improving efficiency. In line with this, Sify has signed a 231 MW renewable energy power purchase agreement to power its DCs and has already onboarded 99 MW of renewable energy. The company aims for a 29 per cent reduction in greenhouse gas emissions by FY2025, following ASHRAE guidelines. Sustainability initiatives extend to the supply chain, incorporating green cement and steel in DC construction. Additionally, Sify is repurposing old infrastructure for green DC development while leveraging solar and wind energy. The adoption of smart power management technologies helps monitor and optimise energy usage, and eco-friendly materials and processes are integrated into the design phase to minimise environmental impact.
On a larger scale, several initiatives are shaping the sustainability efforts of Indian DCs. Renewable energy integration is gaining momentum, with companies increasingly adopting solar and wind energy to power their facilities. Energy-efficient designs are being implemented through advanced cooling solutions like liquid cooling and free air cooling, with hybrid cooling systems being explored to suit India’s diverse climatic conditions. Government policies also play a crucial role, as the Ministry of Power’s Energy Conservation Act mandates energy efficiency improvements, driving the IT sector towards greener practices. Additionally, AI and automation are being leveraged for real-time energy management, enhancing efficiency by dynamically adjusting power and cooling systems.
What are some of the biggest challenges that the industry faces today? Do you have a regulatory/policy wish list?
India’s DC industry faces key challenges, including the need for reliable and sustainable energy supply, operational issues with unrestricted renewable energy wheeling, and the absence of a dedicated sub-code in the building code for design, safety and efficiency standards. Additionally, a shortage of skilled professionals in cloud architecture, network engineering, cybersecurity and emerging technologies poses a significant hurdle.
A uniform renewable energy policy across the country and the government’s emphasis on nuclear energy are at the top of our wish list. Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2025-26, announced a significant push for India’s clean energy transition, with a special focus on nuclear energy.
What is the outlook for the Indian DC market over the next few years? What will be the key opportunities?
The Indian DC market is set for significant transformation over the next few years, driven by advancements in AI, sustainability initiatives and energy availability.
Key opportunities and innovations in the DC industry focus on sustainability, efficiency and emerging technologies. DCs are exploring alternative energy sources such as small module reactors and microgrids to enhance resilience, while advanced cooling technologies such as direct-to-chip liquid cooling are improving energy efficiency. The expansion of edge computing is enhancing real-time processing for AI, IoT and 5G applications. AI-driven automation and predictive analytics are optimising infrastructure operations, making DCs more agile and efficient. Meanwhile, emerging technologies like hydrogen-powered DCs and nuclear energy solutions are expected to drive significant change in the near future.
By 2026, India’s DC capacity in major metropolitan cities is expected to reach 2,000 MW, driven by 5G penetration, cloud adoption and rising OTT and content consumption, according to a report by the Confederation of Indian Industry and Colliers. The market has also witnessed significant scalability and density growth, positioning India for future expansion. While Tier I cities remain primary hubs, there is a steady rise in DCs in Tier II cities, making them favourable for edge DC development.
As technology advances, DCs are evolving to meet changing business needs, with IoT, AI and ML driving the shift towards third-party and cloud platforms. This transition allows businesses to reduce operational costs by moving from on-premises infrastructure to cloud-based computing, storage and networking services.
