Indian data center market size to breach $11 billion by 2027

The Indian data center market size was valued at $4.35 billion in 2021 and is expected to grow at a CAGR of 15.07% during 2022-2027. The enterprise adoption of cloud-based services, big data analytics, and IoT services has been a strong force for data center investments in India. COVID-19 has significantly aided the demand for data center services such as colocation and managed cloud services among enterprises in India. The migration of traditional service offerings to cloud-based platforms by government agencies is also a major driving factor for the development of data center facilities in India. The India data center market by area is expected to reach 2,200 thousand square feet by 2027.

Now, key questions that arise is what lies ahead for the data center industry in India? What new trends are going to shape its future? The trend shows, the data center industry is evolving and new trends will keep emerging with the demand for new-age disruptive technologies such as AI, edge computing, and IoT can be utilized to maximize energy efficiency and minimize environmental impact. India contains several data center clusters throughout the country providing plenty of colocation opportunities. India witnessed 16 new projects/expansions in 2021, and some major investors in the market include companies like Bharti Airtel, AWS, Colt Data Centre Services, ST Telemedia Global Data Centres India, NTT Global Data Centers, CtrlS, and Yotta Infrastructure, ESDS and Capitaland among others.

The demand for more data centers arises from the demand for Data localization. The government has issued guidelines highlighting the need to store data of Indian users within the country’s boundaries. Data localization has made it mandatory for companies that collect critical consumer data to store and process it in local data centers. This has given a huge surge to local data centers. Secondly, demand for Edge data centers, which are small data centers that are located closer to the edge of a network. They typically connect to a larger central data center or multiple data centers.

By processing data and services closer to the end-user, edge computing allows organizations to reduce latency and improve the customer experience. Such data centers are extremely beneficial for industries that need data processing in real-time such as autonomous vehicles, telemedicine, telecommunication, OTT platforms, and smart wearables. The trend shows Hyperscale operators are also showing increasing interest in the India market, with AWS, Google, and Microsoft investing in the country.

Google has cloud regions in Maharashtra and Delhi, Microsoft opened its Maharashtra data center in 2021, with another MoU signed with the Government of Telangana. AWS is also setting up a second in Telengana, in addition to the one in Maharashtra.

India is also witnessing investments by several new entrants, such as AdaniConneX, Ascendas India Trust, Equinix, EverYondr, and Digital Realty & Brookfield Infrastructure, among others who are currently building, or have planned, data centers in the coming years. As the digitalization of India is a priority for the government, there is an incentive scheme of 120 billion to facilitate the installation of data centers. Moreover, the Indian government aims to invest over $1 billion in the next five years as part of a hyperscale data center scheme.

Dr. Deepak Kumar Sahu, President & CEO, VARINDIA