India’s data centre capacity to double to 1,700-1,800MW by fiscal 2025: CRISIL

The data centre capacity in India is expected to double to 1,700-1,800MW in FY25P from nearly 870MW capacity in FY22E, according to ratings agency CRISIL.

The capacity expansion will be driven by a trio of factors – data boom, digital adoption and local data storage mandates, and will require investments of about Rs 40,000 crore, the agency said in a research note Wednesday.

Further, the launch of 5G services, expected by the end of fiscal 2023 will boost the demand for data and storage capacities. Data localization norms and digital initiatives would be another tailwind, it added.

“The industry is expected to add ~850-900 MW capacity during fiscals 2023-25. Mumbai, the financial capital of the country that accounts for around half of the existing capacity, is expected to add ~300 MW,” said Nitesh Jain, Director, CRISIL Ratings.

This growth in the financial hub of the country will be supported by proximal access to subsea cables, optic fibre connectivity, uninterrupted power supply and availability of skilled manpower. “Hyderabad, Chennai, and Pune will follow suit, and likely to add ~400 MW capacity cumulatively,” Jain said.

Adoption of advanced technologies and digital infrastructure, and the increasing use of smart devices by users have led to a massive spurt in data and cloud usage, CRISIL said, attributing that these created a huge demand for data centres.

According to the note, wireless mobile data traffic grew ~31% to ~253 exabytes in 2021.

Of the Rs 40,000 crore investments, a third of it will be spent to acquire land, a fifth on substations, and the balance for equipment purchase and fit-outs, among others.

“The share of renewables in data centre power consumption is expected to increase to ~35-40% by fiscal 2025 from less than 15% now. Renewable power being cheaper will improve the operating margins of the sector by ~200-300 basis points by fiscal 2025 and help sustain project’s returns on capital employed at 13-15%,” said Rakshit Kachhal, Associate Director, CRISIL Ratings.

A major fillip to the industry will come from the implementation of the Data Protection BIll and the Data Centre Policy, along with a mass uptake of fifth-generation services, CRISIL said.

The Indian data centre industry, however, faces threats from social engineering, cyber attack, data theft and leakages, despite high levels of security.