India's data center capacity will more than double by FY27, claims Crisil report
Crisil Report: Data centers are typically a large cluster of network servers that organizations use for remote storage or distribution of large amounts of data. Data localization plans are expected to increase investments in data centers. Data center capacity may more than double by FY27, a report claims. Let's know more about this.
The capacity of the Indian data center industry is set to more than double to 2 to 2.3 gigawatts by FY27, thanks to increasing digitization in the economy. Enterprises are increasingly investing in cloud storage, which will help increase capacity. Crisil Ratings made this claim on Monday.
According to the rating agency, the growing penetration of generative artificial intelligence (GenAI) is expected to drive demand in the medium term. The rapid advancement of Gen AI, which requires more computational power and lower latency than traditional cloud computing tasks, will also boost data center demand in India.
Data centers are typically large clusters of networked servers that organizations use for remote storage or distribution of large amounts of data. Besides the data localization schemes, the incentives offered by various states to attract such investments are also likely to drive investments in data centers. Data centers meet the demand for computing and storage infrastructure, which is driven by two factors.
Firstly, enterprises are fast-forwarding their businesses to digital platforms, including the cloud-a trend accelerated ever since the Covid-19 outbreak. Secondly, access to high-speed data has led people to increase internet consumption favoring social media consumption, over-the-top (OTT), as well as digital payments.
Crisil said mobile data traffic has recorded a compound annual growth rate (CAGR) of 25 percent in the last five fiscal years. This will expand from 24 GB a month at the end of FY24 to 33-35 GB by FY26.
Manish Gupta, senior director, and deputy chief rating officer of Crisil Ratings, said, "To meet the growing data center demand, an investment of Rs 55,000-65,000 crore is required over the next three fiscal years, which will be spent mainly on land and building, power equipment and cooling solutions. Data center operators typically build infrastructure - such as land and building, which accounts for 25-30 percent of the total capital expenditure."
