India’s data centre industry has experienced explosive growth, with its total valuation reaching Rs. 85,580 crore (US$ 10 billion) and generating Rs. 10,270 crore (US$ 1.2 billion) in revenue for FY24, according to a recent Anarock Capital report. The sector has witnessed an impressive 139% increase in capacity, surging from 590 megawatts (MW) in 2019 to 1.4 gigawatts (GW) in 2024.

Major Players Dominate with 78% Revenue Share

The market is primarily controlled by four major operators who account for 78% of the industry's revenue. While operating profit growth has plateaued since 2020, it is expected to increase by 50-55% as numerous under-construction projects stabilize and become fully operational.

Capital Deployment and Investment Trends

The Indian data centre industry has witnessed substantial capital deployment, with a total of Rs. 35,944 crore (US$ 4.2 billion) invested up to FY24. This investment was split between:

• Equity funding: Rs. 22,251 crore (US$ 2.6 billion)

• Debt financing: Rs. 20,539 crore (US$ 2.4 billion)

In the past decade, the sector has attracted over Rs. 55,627 crore (US$ 6.5 billion) in investments from private equity firms, joint ventures, and acquisitions, underscoring the growing confidence of global investors in India’s data infrastructure.

Rising Internet Penetration and Data Consumption Fuel Growth

India’s internet penetration rate has skyrocketed from 33.4% in 2019 to 55.2% in 2024, driving a massive surge in data consumption. Key statistics include:

• Data consumption per user: Increased from 11.5 GB/month in 2019 to 21.1 GB/month in 2024.

• Average mobile data traffic per smartphone: More than doubled from 13 GB to 32 GB over the same period.

This exponential growth in internet usage has led to a corresponding surge in demand for high-grade data centres, positioning India as one of the fastest-growing data centre markets globally.

Mumbai and Chennai Lead IT Power Capacity

The Indian data centre industry is heavily concentrated in major metropolitan areas, with Mumbai and Chennai accounting for 70% of India’s total IT power capacity.

• Mumbai alone contributes nearly 49% of the country’s IT power capacity, solidifying its position as India’s data centre hub.

• Other key contributors include:

  • Noida: 9% of IT power capacity.

  • Bengaluru: 8% of the total capacity.

  • Pune: 5%, contributing to an overall occupancy rate of 76%.

Hyperscale Data Centre Land Acquisitions Surge

The report highlights a significant increase in land acquisitions for hyperscale data centres over the last five years. A total of 440 acres of land has been acquired to meet the growing demand for large-scale data centres.

• Hyderabad emerged as the leader, accounting for 69% of the land acquired for data centre projects.

• Mumbai followed with 22%, reflecting its continued dominance as India’s primary data centre hub.

• Pune accounted for 9% of the acquired land.

Expansion of Hyperscale Infrastructure and Market Dynamics

India’s data centre growth is being driven by the rise of hyperscale infrastructure, which caters to large-scale enterprise workloads, cloud services, and the growing demand for digital applications.

• Hyperscale data centres provide significant operational efficiencies and are critical in supporting India’s fast-growing e-commerce, fintech, and OTT platforms.

• The surge in cloud adoption and digital transformation initiatives has further accelerated the need for hyperscale facilities.

Revenue Growth and Profitability Outlook

Although operating profit growth slowed after 2020, the report forecasts a 50-55% jump in profitability as under-construction projects are expected to achieve operational stability over the next 12-18 months. With growing demand, increased capacity, and higher operational efficiency, the sector is poised to see significant revenue growth moving forward.

Future Prospects and Emerging Trends

Industry experts predict that India’s data centre sector will continue to witness double-digit growth driven by:

• 5G adoption: Leading to increased data traffic and higher demand for edge data centres.

• AI and Machine Learning (ML) integration: Driving the need for faster and more efficient data processing.

• Edge computing: Reducing latency and improving the performance of data-intensive applications.

Insights from Industry Leaders

According to Anuj Puri, Chairman of Anarock Capital, “India’s data centre ecosystem is experiencing unprecedented growth, with hyperscale infrastructure driving investments and pushing India toward becoming a global data powerhouse. Rising internet penetration and increased data consumption will continue to fuel growth in the coming years.”

As India continues its digital transformation journey, the data centre industry is expected to play a pivotal role in supporting the country’s digital economy. With increased capital deployment, expanding capacity, and the emergence of hyperscale data centres, India’s data centre market is well-positioned for sustained growth in the years ahead.

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