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India's data centre capacity is set to more than double to 2-2.3 GW by 2026-27, led by increasing digitalisation as organisations increase their investments in cloud storage, Crisil Ratings said in a report on Monday. Further, the report stated that rising penetration of Generative Artificial Intelligence (GenAI) will drive the demand over the medium-term.
ET Year-end Special Reads Gold outshines D-St with 20% returns, but 2025 may be different The year of the pause: How RBI maneuvered its policy in 2024 2024, the year India defeated China's salami-slicing strategy To support the strong demand, the incremental capital expenditure would be supported by a higher proportion of debt funding, which will result in a moderate increase in debt levels, it said. Data centres cater to the computing and storage infrastructure demand as enterprises rapidly shifting their businesses to digital platforms, including cloud, a trend that has accelerated post Covid-19 pandemic, it said. The other major factor is that increased accessibility of high-speed data has led to a surge in internet usage, including social media, over-the-top (OTT) platforms and digital payments, it added.
Notably, mobile data traffic logged a compound annual growth rate (CAGR) of 25 per cent over the last five fiscals, standing at 24 GB per month at end-fiscal 2024, and is expected to rise to 33-35 GB by FY26, the Crisil Ratings report said. Marketing Digital marketing - Wordpress Website Development By - Shraddha Somani, Digital Marketing Trainer, Consultant, Strategiest and Subject Matter expert View Program Web Development Maximizing Developer Productivity: The Pomodoro Technique in Practice By - Prince Patni, Software Developer (BI, Data Science) View Program Artificial Intelligence(AI) Basics of Generative AI: Unveiling Tomorrows Innovations By - Metla Sudha Sekhar, IT Specialist and Developer View Program Entrepreneurship Boosting Startup Revenue with 6 AI-Powered Sales Automation Techniques By - Dr. Anu Khanchandani, Startup Coach with more than 25 years of experience View Program Finance Financial Literacy for Non-Finance Executives By - CA Raja, Chartered Accountant | Financial Management Educator | Former AVP - Credit, SBI View Program Finance Financial Literacy i.
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Anu Khanchandani, Startup Coach with more than 25 years of experience View Program Marketing Performance Marketing for eCommerce Brands By - Zafer Mukeri, Founder- Inara Marketers View Program In addition to the ongoing demand, it said that the rapid advancement of GenAI, which requires higher computational power and low latency than traditional cloud computing functions, will also provide tailwind to the data centre demand in India. Discover the stories of your interest Blockchain 5 Stories Cyber-safety 7 Stories Fintech 9 Stories E-comm 9 Stories ML 8 Stories Edtech 6 Stories "To meet the growing data centre demand, an investment of Rs 55,000-65,000 crore is required over the next three fiscals, primarily towards land and building, power equipment and cooling solutions. "Data centre operators typically build infrastructure - land and building, which account for 25-30 per cent of overall capex - with the expectation of future tie-ups," Crisil Ratings Senior Director and Deputy Chief Ratings Officer Manish Gupta said.
The capacity additions are driven by expansion plans of existing players as well as entry of new players, said the report. "Once capacities are tied up, data centres benefit from predictable cash flows backed by a stable client base resulting in low churn rates. This is due to high switching cost for customers on account of their investments and possible business disruptions when switching.
"Amid significant capex plans for expansion, the debt-to-earnings before interest, tax, depreciation and amortisation (Ebitda) ratio of data centre operators is expected to increase to 5.4x this fiscal from 5x last fiscal, before improving from next fiscal as capacity utilisation ramps up," Crisil Ratings Director Anand Kulkarni said. ET Year-end Special Reads An Indian's guide to moving abroad as the world looks for 'better' immigrants The year of the HNIs: How India's rich splurged in 2024.
