India’s Data Centre Revolution: $3.8 Billion Investment Fueled by AI and 5G
India is witnessing a remarkable shift in its data centre landscape, driven primarily by advancements in artificial intelligence (AI) and the broad rollout of 5G technology. According to a recent report by JLL India, the country’s data centre industry is projected to grow by an astounding 66% by 2026, which is indicative of the increasing demand for data processing and storage capabilities in a digitally driven economy.
The report details that the data centre sector is expected to add a staggering 604 megawatts (MW) of capacity, requiring approximately 7.3 million square feet of space and an investment of around $3.8 billion during the period from the second half of 2024 to 2026. This investment signals a robust demand for infrastructure that can support AI applications, which are becoming integral to various industries.
Factors Contributing to Growth
One of the key factors contributing to this growth is the expanding 5G network coverage, which is anticipated to reach over 90% of India’s population by the end of 2023. This technological leap is crucial, as 5G provides the low-latency and high-speed connectivity needed to support AI technologies, enabling real-time data processing and analysis.
India is rapidly establishing itself as a global hub for AI innovation, with hyperscalers increasingly investing in self-build projects in major data centre hubs. Operators are also planning new campuses equipped with power lines capable of supporting AI clusters, indicating a strategic shift towards infrastructure that meets the demands of AI-driven applications.
Market Performance
In the first half of 2024 alone, the data centre industry achieved a capacity of 917 MW, with an impressive occupancy rate of 873 MW, reflecting the tight market conditions and the sector’s rapid expansion. Over the past four and a half years, the industry has grown by 2.5 times, showcasing a compound annual growth rate (CAGR) of 24%.
Regional Insights
Navi Mumbai is emerging as a significant data centre location, with demand expected to reach 800 MW in the coming years. Major cities like Mumbai and Chennai are poised for substantial growth, driven not only by the demand for data storage but also by the need for specialized skills and opportunities in related sectors.
Implications of Growth
The implications of this growth extend beyond mere economic statistics; as India positions itself at the forefront of technological advancements, the data centre industry’s expansion is set to create numerous job opportunities while fostering innovation across various sectors. This transformation solidifies India’s status as a global technology powerhouse, ready to embrace the digital future.
In conclusion, the convergence of AI and 5G is revolutionizing India’s digital ecosystem. With significant investments and a proactive approach to infrastructure development, the country is on a path to becoming a leader in the global technology landscape, making the next few years crucial for stakeholders in the data centre industry.
