India is poised to become a leading data hub in the region, driven by a significant rise in demand for data centres, according to a report by JM Financial. Both structural and cyclical factors are contributing to this surge. Key structural drivers include a massive internet user base generating vast amounts of data, the government’s push for data localization, and the rapid adoption of artificial intelligence (AI).
Despite generating 20% of the world’s data, India accounts for just 5.5% of global data centre (DC) capacity. Past delays in capacity expansion have only widened the demand-supply gap, triggering a strong cyclical push to build more DC infrastructure.
The report estimates that India’s colocation (colo) data centre capacity will reach 1.35GW in 2024—a 38% year-on-year increase. However, the country still has one of the world’s lowest DC densities, at just 14 petabytes per megawatt. To reach even 50% of China’s DC density, India would need 5GW of total capacity by 2030. This target aligns with the current under-construction and planned capacity of 3.3GW by 2028.
With an average capex of $465 million per MW, this would require an additional $20 billion in capital expenditure over the next five years. On top of this, investments in cloud infrastructure—such as servers—could amount to another $60 billion. While hyperscale’s are expected to drive most of the cloud investment, the report notes that data centre capex alone could lead to $10 billion in equity issuance (assuming a typical debt-to-equity ratio seen among global players). Importantly, these developments are expected to primarily meet India’s domestic demand.
A data centre is a physical facility used by organizations to house critical applications and data. It consists of interconnected computing and storage resources that support the delivery of shared applications and services. Key components include routers, switches, firewalls, storage systems, servers, and application delivery controllers.
