Rising digitisation, 5G rollout to bolster India’s data centres further in 2023

Dec 26, 2022
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Data centres in the country have already emerged as one of the most attractive growth opportunities for global investors and developers. Investments are flowing into the data centre segment, with multiple new markets created simultaneously, along ...


With growing digitization and internet penetration in India coupled with the importance of smart technologies, IoT-powered devices, big data, and the rollout of 5G network is expected to boost the data center and related real estate market further in 2023.


Data centers in the country have already emerged as one of the most attractive growth opportunities for global investors and leading developers. Investments are flowing into the data centre segment, with multiple new markets created simultaneously, along with the rapid development of campus sizes in key cities including Mumbai and Chennai.


Global majors like Google, Microsoft and Amazon have already started setting up their hyperscale data centers in India.


The data center industry is expected to close the year 2022 with robust demand growth with estimated absorption in the range of 150-170MW, showed a JLL India study. This impressive growth can be attributed to the delivery of pre-committed supply to hyperscale cloud service providers (CSP).


“The Indian data centre industry is expected to add 681 MW capacity by the end of 2024 leading to a doubling of capacity to 1,318 MW that will need 7.8 million sq ft of real estate space. Mumbai is expected to account for 57% of the new supply followed by Chennai at 25%,” said Rachit Mohan, Head, Data Centre Advisory, India, JLL.


According to him, increasing digitisation is expected to save costs and make organisations resilient in times of uncertainty which will be one of the key drivers of data centres’ growth in India. The impact of 5G rollout, personal data protection legislation and investment incentives is expected to drive multi-year growth of Indian data centres.


Experts believe the data centre ecosystem will continue to thrive over the next decade and the demand will continue to increase owing to the digitalization wave.



“In 2023, there will be a renewed focus on data protection and security, and the need for edge data centres will continue to rise. Further, data centres are crucial to the rollout of 5G. Data centres are anticipated to make improvements in infrastructure, connectivity, and administrative services to support 5G services,’”

Sumit Mukhija, CEO, STT GDC India


According to him, data centers most importantly will operate more sustainably as companies are pressured to act in response to growing climate change awareness.


The commercial rollout of the 5G has the potential to increase the median download speed by 10 times as compared to the existing 4G network. The 5G network is projected to account for almost 40% of India’s mobile subscriptions by the end of 2027 with average data usage of 50 GB per month.


According to Mohan, public service cloud providers continue to see double-digit demand growth driven by the increasing use of digital services by BFSI, manufacturing, public sector, media, gaming, etc. In turn, this is expected to drive increasing demand for the data centre industry.


The 5G-driven growth in Over-the-top (OTT) video streaming, online gaming, augmented reality, and digital commerce is expected to drive data usage and this would also push the growth of data centers.


Data-centers have already become crucial for several concepts such as payments, gaming, or even the needs of upcoming trends such as the metaverse.


This clearly indicates the rising preference for India among global data centre majors and is attributed to the data localisation norms and the government’s proposed new data centre policy aimed at simplifying the rules. The new data centre policy is also expected to provide necessary clearances and infrastructure in a time-bound manner.


Additional factors, such as the new submarine cable infrastructure linking Mumbai and Chennai to Singapore, South East Asia, Europe and the Middle East, will help position India as a more attractive Asia-Pacific location for data centre development, expansion and investment in the years to come.


With a population of over 1.4 billion, the world’s fifth-largest economy in terms of GDP and an expanding focus on the digital delivery of services, India represents a key market opportunity to extend coverage, capacity and connectivity options for the world’s leading service providers as well as local and global enterprise customers.


India is a high-growth market, with data center demand expected to significantly increase, driven by rapidly growing data consumption, the digitization of the economy, the onset of 5G and data localisation trends.


Colocation (COLO) operators are scaling up construction to meet the delivery targets. Some operators adopted retrofitting existing buildings to reduce the time of delivery.


Supply of data centers has been mostly concentrated in Mumbai due to submarine cable connectivity, power availability and a large user market. As the year 2022 comes to an end, the supply is expected to exceed 2021 levels by a healthy margin.


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