The Tipping Point: India's Data Center Revolution India's data center operational capacity is expected to more than double to 2,000-2,100 MW by FY27 from 950 MW in FY24, involving investment of up to INR 55,000 crore, supported by digital explosion and data localization initiatives, according to ICRA

As internet becomes ubiquitous, data consumption has risen multifold. Each time we are watching a video or browsing the internet, we are consuming data. According to the latest report by Nokia, the total monthly mobile data consumption in India reached a record 17.4 exabytes per month with a compound annual growth rate (CAGR) of 26 per cent over the past five years, driven by the growing adoption of 5G technology. The launch of 5G, Nokia suggests, has emerged as a significant catalyst for the growth in data usage, contributing to 15 per cent of all data traffic in 2023.

In the enterprise side, increased digitalization, cloud becoming mainstream, and adoption of emerging technologies like artificial intelligence (AI), machine learning (ML), and internet of things (IoT) have led to increased demand for data centers to store and process the vast amount of data. All of this has led India's data center revolution to reach a tipping point resulting in mammoth growth of the entire industry.

According to ICRA, India's data center operational capacity is expected to more than double to 2,000-2,100 MW by FY27 from 950 MW in FY24, involving investment of INR 50,000-55,000 crore, supported by digital explosion and data localization initiatives. The Indian data center market has several leading players such as NTT Global, STT Global, CtrlS, Sify Technologies, Yotta, and ESDS, among others.

"Data explosion and data localization are paving the way for a data center revolution in India. The low data tariff plans, access to affordable smartphones, adoption of new technologies and growing user base of social media, e-commerce, gaming and OTT platforms are some of the key triggers for data explosion. Also, AI-led demand, which is expected to increase multi-fold in the next 3-5 years, presents significant opportunities. This, coupled with favourable regulatory policies from the Central and State governments, the draft Digital Personal Data Protection Bill, and the infrastructure status are supporting the growth prospects," said Anupama Reddy, Vice President and Co-Group Head - Corporate Ratings, ICRA.

Around 95 per cent of the existing capacity is in six cities in India with Mumbai and Chennai leading the race due to their inherent advantage in the form of the dense wet cable ecosystem, which offers best latencies (amount of time it takes for a data to travel from one place to another). Mumbai has been the front runner due to its central location, reliable power and cable landing stations. Mumbai contributes more than 50 per cent to the current capacity and is expected to remain the key location for the upcoming data center capacity in India.

THE HIGH VOLT EXPANSION

CtrlS Datacenters operates a network of 15 data centers strategically located across India's key metropolitan cities, with major presence in Mumbai, Hyderabad, and Bengaluru. The company currently has an operational capacity of 250 MW, serving a diverse portfolio of enterprise clients, cloud service providers, and digital businesses. As part of its ambitious USD 2 billion investment plan, CtrlS aims to double the capacity in next 3 years. These key areas include the expansion of hyperscale data centers tailored for AI and cloud workloads, achieving Net Zero by 2030, and bolstering team strength and capabilities.

CtrlS Datacenters operates Edge data center facilities in tier-2 markets such as Patna and Lucknow, with further expansions planned in these markets along with GIFT City (Ahmedabad), Bhubaneswar and Guwahati. There are plans to set up over 20 edge datacenters in tier-2 and tier-3 markets across India.

"Our strategic expansion into tier-2 and tier-3 cities, coupled with edge data centers to support low-latency 5G applications, enables localized processing, reducing backhaul traffic and enhancing efficiency. CtrlS is committed to providing secure, resilient, and sustainable data solutions to support India's growing digital economy and to position the country as a global data center powerhouse," said Vipin Jain, President of Datacenter Operations, CtrlS.

Sify Technologies currently operates 14 data centers across six major metros in India, including Mumbai, Noida, Chennai, Hyderabad, Kolkata, and Bengaluru, with a total capacity of 190 MW. In terms of expansion, Sify has two new data centers in Siruseri (Tamil Nadu) and Noida that are nearing completion and ready for commissioning. The upcoming center in Siruseri will have a capacity of 130+ MW while the Noida center will have a total capacity of 130+ MW.

"There are several factors driving our data center business in India. Some of them are accelerated cloud adaptation resulting in more hyperscaler business; hybrid cloud implementations with demand for dedicated collocation; rise in GenAI use cases; and increased digitalization across industry segments, leading to large build-to-suit data center demand," said Sharad Agarwal, CEO, Sify Infinit Spaces.

ESDS Software Solution Ltd, a company offering one-stop solution for cloud, IT security, and managed services, is on an expansion mode with plans to double capacity to 14-20 MW from 7 MW currently. ESDS operates four data centers in India – Nasik, Mumbai, Bengaluru, and Mohali.

"In the last 3-4 years, new technologies like AI, ML, mixed reality, computer vision, blockchain, and IoT have emerged wherein each of these run on very high advanced compute. It will not run on your typical mobile devices or desktops. It requires heavy duty compute which in turn requires lot of power and cooling. And that can be provided by a data center environment only," said Piyush Somani, Founder, CEO and CMD, ESDS.

Yotta operates hyperscale data center parks in Navi Mumbai and Greater Noida. "Our Panvel campus, has the potential to scale up to over 1000 MW, while our Greater Noida campus can scale to more than 250 MW. We also have another state-of-the-art facility in Gujarat. Our G1 data center in GIFT City, Gujarat, has a capacity of over 350 high-density racks and 2 MW power (which can be scaled further as per demand). Additionally, we have two operational data centers in Airoli, Navi Mumbai—TB1 and TB2—each with a capacity of 1 MW," said Rohan Sheth, Head - Colocation, Data Centre Build and Global Expansion, Yotta.

Yotta recently announced a partnership with the government of Telangana to establish India's largest AI supercomputer, powered by 25,000 high-performance GPUs. "This will be housed within a purpose-built, 50 MW AI Cloud Data Center campus in Hyderabad's AI City. The first phase, Yotta H1, will be the state's inaugural high-density liquid-cooled AI cloud data center, designed to support the growing needs of AI-driven workloads," said Sheth.

PARTNERING WITH HYPERSCALERS

Most Indian data center players said they do not compete with hyperscalers like Amazon Web Services (AWS) or Google Cloud but partner with him.

"Yotta does not compete with global hyperscalers. In fact, we work very closely with them at various levels, and both complement each other in terms of the latest technology, services, policy making, etc. There has been a growing demand for localized data storage and cutting-edge cloud services in the country in recent years, which Yotta is well-positioned to meet. In serving this vast Indian market, Yotta and global hyperscalers work hand in hand in advancing the digital ecosystem with the best of both offerings," said Sheth.

Sify's Agarwal concurs, "We aim to build strategic collaborations with global hyperscalers to drive innovation, enhance scalability, and unlock new efficiencies for our clients. By partnering with leading cloud providers, we can leverage cutting-edge technologies, offer seamless data integration, and ensure optimized performance across all platforms."

RISING THROUGH CHALLENGES

The high-octane data center industry comes with its own set of challenges. The data center industry faces high operational costs alongside challenges in scalability, cybersecurity, sustainability, and skilled workforce. Power and cooling are major cost drivers, with data centers consuming 1-1.5 per cent of global electricity. Advanced cooling solutions and energy-efficient hardware can help reduce energy costs while supporting environmental goals.

"Proactive readiness of land, power, regulatory permissions and robust power infrastructure planning are essential for smooth project execution. Investing in robust quality control measures, adopting advanced monitoring and predictive maintenance technologies, and prioritizing skilled workforce development can significantly enhance reliability. Meeting the diverse needs of customers often require customized designs, which can increase project complexity and costs. Adopting flexible design methodologies, leveraging standardized components and utilising advanced design software can help balance customization with efficiency," concludes Jain of CtrlS.