India’s Data Centre Industry Set to Attract USD 5.7 Billion Investments by 2026
India’s data centre industry is on track to receive a substantial investment of USD 5.7 billion by 2026, driven by the increasing demand for Artificial Intelligence (AI). A report by Jones Lang LaSalle Incorporated (JLL) forecasts that the country’s Data Centre (DC) sector will witness significant growth, with the addition of 791 MW capacity by 2026, leading to a demand for 10 million sq. ft of real estate space.
A data centre serves as a central facility for an organization’s IT operations, storing, processing, and transferring data and applications. The report emphasizes that the growth in computing power and the rise of new applications will fuel strong demand for data centres in the coming years. As a result, the industry is expected to see a demand of 650-800 MW during 2024-26, largely propelled by the adoption of AI.
Cloud Service Providers (CSPs), which offer IT infrastructure systems for data storage and computing power via the Internet, have adjusted their requirements to accommodate the growing need for AI-driven services. This has led to increased investments by CSPs to support the expansion of AI-led growth in the data centre industry.
Rachit Mohan, Head of Data Centre Advisory, India at JLL, emphasized the necessity for developing new data centres capable of meeting the energy, processing, and cooling requirements driven by the exponential growth in processing power and data volumes due to AI. He noted that the expected advancement in various AI disciplines will further boost the demand for data centres, necessitating increased capacity and enhanced capabilities.
The report highlights a 12% increase in absorption to 81 MW in the second half of 2023 compared to the same period the previous year, with a notable surge in Mumbai as CSPs resume absorption activities. Dr. Samantak Das, Chief Economist and Head of Research & REIS, India at JLL, projects that India’s data centre industry will grow from 853 MW in 2023 to 1,645 MW by 2026, driven by the country’s digital expansion and the anticipated 20% contribution of the digital economy to the GDP.
Despite a lower supply addition of 75 MW in the second half of 2023, resulting in tighter vacancy levels of 5.5%, India’s DC sector is poised for significant growth, with the potential to emerge as a global data hub supported by sustainable practices. With a large user market, a skilled workforce, and a thriving startup ecosystem, India presents a compelling opportunity to establish itself as a key player in the global data centre landscape.
