India’s Booming Data Centre Industry: A $10 Billion Powerhouse

India's data centre industry, now valued at $10 billion, generated $1.2 billion in FY24 revenue, with four key players dominating 78% of the market. Capacity surged 139% since 2019, driven by rising internet penetration (55.2% in 2024) and booming data consumption. Key hubs like Mumbai and Chennai host 70% of IT power capacity. Investment exceeded $6.5 billion in a decade, with a focus on AI-ready, sustainable designs. Emerging edge data centres in tier-2 cities will enhance performance and support India's digital future.

India's data centre industry has emerged as a $10 billion powerhouse, generating approximately $1.2 billion in revenue for the financial year 2023–24 (FY24), according to a report by Anarock Capital. The market is largely driven by four major players, who collectively account for 78% of the industry's revenue.

While operating profit growth stabilized post-2020, the report forecasts a robust 50–55% increase as under-construction projects reach operational stability. The sector has also seen significant capital infusion, with $4.2 billion deployed by FY24, comprising $2.6 billion in equity and $2.4 billion in debt, as of March 2024.

Over the past decade, the Indian data centre industry has attracted over $6.5 billion in investments through private equity, joint ventures, and acquisitions. The industry has experienced remarkable growth, with total capacity surging by 139% to 1.4 gigawatts (GW) in 2024, up from 590 megawatts (MW) in 2019.

Driving Forces Behind the Growth

The rapid expansion of India's data centre industry is closely tied to the country's increasing internet penetration, which has soared to 55.2% in 2024 from 33.4% in 2019. Simultaneously, data consumption per user has nearly doubled to 21.1 GB per month from 11.5 GB, while average mobile data traffic per smartphone has more than doubled, climbing to 32 GB from 13 GB. These shifts have significantly boosted the demand for advanced data centre infrastructure.

Concentration in Key Cities

India's data centre industry is predominantly concentrated in major urban hubs. Mumbai and Chennai together account for about 70% of the nation's total IT power capacity, with Mumbai alone contributing nearly half (49%). Both cities have witnessed substantial growth, with Mumbai's supply expanding by 92% and Chennai's by an impressive 340% between 2022 and 2024.

Other prominent markets include Noida (9%), Bengaluru (8%), Hyderabad (4%), and Pune (5%), contributing to a strong overall occupancy rate of 76%. This metric underscores the high market absorption and operational efficiency of existing facilities.

Land Acquisitions and Hyperscale Data Centres

The report also highlights a surge in land acquisitions for hyperscale data centres, with nearly 440 acres procured over the last five years. Hyderabad leads the pack, accounting for 69% of the total land acquired, followed by Mumbai (22%) and Pune (9%). This trend underscores India's growing appeal to global technology giants that prefer the "own-and-operate" model for their data centre operations.

The Future of Data Centres: AI, Sustainability, and Edge Computing

As artificial intelligence (AI) continues to revolutionize industries, the demand for next-generation data centres is set to rise sharply. These advanced facilities will need to integrate cutting-edge technologies such as liquid cooling systems to handle higher rack densities exceeding 30–40 kW per rack. Additionally, they will require enhanced structural designs to support heavier floor loads of up to 2,500 kg per square metre, enabling them to accommodate increasingly powerful computing systems.

Sustainability is poised to take centre stage as the industry evolves. The shift toward green data centres is gaining momentum, with greater emphasis on energy-efficient designs, renewable energy integration, and sustainable cooling technologies.

Moreover, the rise of edge data centres is anticipated in tier-2 and tier-3 cities such as Jaipur, Ahmedabad, Kochi, Vizag, Lucknow, Patna, and Bhubaneswar. These decentralised facilities will be pivotal in processing latency-sensitive applications and supporting generative AI services. By bringing computational power closer to end-users, edge data centres will enhance performance and responsiveness.

India’s data centre industry is not only experiencing unprecedented growth but is also set to play a transformative role in the country’s digital future, driven by technological advancements, sustainability initiatives, and increasing connectivity.