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India’s Data Centre Boom
Context:
India’s data centre capacity is set to grow by 44% in 2025, reaching 2.1 gigawatts (GW), with further expansion projected to 15-17 GW by 2030. However, industry leaders have emphasised the need for a dedicated association to better represent the sector’s interests, particularly in addressing power supply challenges, taxation, and infrastructure issues.
Need for a Data Centre Association
- In a January 2024 meeting with the Central Electricity Authority (CEA), officials from MeitY and Nasscom stressed the need for a formal industry body.
- The CEA suggested creating a sector-specific association, similar to those in battery storage and solar energy, to facilitate industry-government coordination.
Power Demand and Infrastructure Concerns
- India’s current data centre load is 1.2 GW, expected to reach 4.2 GW by 2031-32 per CEA estimates.
- However, industry estimates suggest much higher growth, with Navi Mumbai alone expected to require 7-8 GW in the near future.
- The AI boom will further intensify energy consumption, with data centre electricity use expected to double by 2026, per the International Energy Agency (IEA).
- The government recommends locating data centres near renewable energy sources or in tier-2 and tier-3 cities to avoid urban congestion and transmission challenges.
Investment and Market Expansion
- India’s data centre industry is still in its early stages, with 70-80% of projected investments yet to materialise.
- The sector has already attracted $6.5 billion in investments (2014-2024) through private equity, joint ventures, and acquisitions.
- Mumbai and Chennai dominate the Indian data centre market, accounting for 70% of total capacity.
India’s Role in the Global Data Economy
- Despite consuming 20% of global data, India hosts only 3% of global data centres.
- India’s data centre industry CAGR is 24%, while global growth stands at 80%, highlighting the need for accelerated expansion.
Challenges and the Push for Green Energy
- Key issues include power supply reliability, telecom infrastructure, and taxation.
- AI-focused data centres will require more power than traditional centres, prompting tech giants like Google and Microsoft to sign nuclear energy deals.
- India has approved subsidies for over 18,000 GPUs under its ₹10,370 crore IndiaAI Mission, further increasing energy demands.
- The industry is under pressure to align with net-zero targets by 2030, requiring a shift toward renewable and green energy sources.
