The Data Centre (DC) industry in India is expected to expand, adding 791 MW of capacity by 2026, according to a report by real estate and investment management company JLL. This growth will require 10 million square feet of space and will attract $5.7 billion in investments.

The surge is due to the rising use of Artificial Intelligence (AI). With the growing use of AI, the demand for Indian data centres is projected to reach between 650 and 800 MW from 2024 to 2026.

A data centre is a facility that centralises an organisation’s IT operations and equipment to store, process and transfer data and applications.

The report points out that Cloud Service Providers (CSPs), who essentially offer IT infrastructure systems primarily for data storage and computing power accessible through the Internet, have realigned their requirements to factor in AI-led demand. The CSPs have also announced higher investments to scale up AI-led growth.

“The exponential growth in processing power and data volumes, driven by AI, necessitates the development of new data centers capable of meeting energy, processing, and cooling needs. The anticipated expansion and progression of diverse AI disciplines are projected to create additional demand for data centres, expanding their capacity requirements and advancing their capabilities2,” said Rachit Mohan, Head, Data Centre Advisory, India, JLL.

The report indicates a 12 per cent rise in absorption to 81 MW during the latter half of 2023, up from 72 MW recorded during the corresponding period in the previous year. This growth is attributed to the resurgence of cloud service providers (CSPs) following a temporary slowdown in the first half of 2023. In Mumbai, absorption nearly doubled during this period as CSPs resumed their pace of uptake.

During the second half of 2023, there was a reduced supply addition of 75 MW as the available supply from the first half was utilized to meet the demand, leading to tighter vacancy levels of 5.5 per cent. The country’s data centre sector grew from 350 MW in 2019 to 854 MW in 2023, aligning with the upward trend in digital usage.

(Inputs from BL intern Meghna Barik)