India, once considered a brownfield data centre country, has rapidly evolved into a greenfield powerhouse. Remarkable growth in this industry has transformed the country into a key stakeholder in the Asian market. A greenfield data centre is a new facility built from scratch, without constraints imposed by existing structures or systems. It’s a clean slate that allows for the implementation of the latest technologies, designs and best practices.
A brownfield data centre, on the other hand, refers to the expansion or modification of an existing facility, which comes with the challenge of working around current structures, systems and limitations in terms of space, power supplies and cooling. Previously, data centre locations in Asia were primarily limited to Hong Kong and Singapore. Now, India’s strategic advantages, such as the ample availability of land, skilled resources and favourable government policies, have attracted significant investments.
The selection of land for data centres is an especially important factor, and India stands out because of its abundance of natural resources, fast-improving power infrastructure and available land. Many other Asian countries face space and power-supply limitations, but here the runway is clear for data centre expansion. The size of India’s data centre market was estimated at 1,675 MW in 2023 and is expected to reach 4,770 MW by 2029, with a compound annual growth rate of 19%. Total installed racks are forecast to reach more than 710,000 units by 2029 – mostly located in Mumbai – up from about 250,000 in 2023.
Mumbai now accounts for 52% of the total data centre inventory in India, followed by Chennai, Delhi and Hyderabad. This growth is driven primarily by hyper-scalers, with the likes of Amazon and Google actively investing in India to capitalise on its vast potential. And, while geopolitical factors are affecting the expansion of Chinese cloud giants Alibaba and Tencent into the region, homegrown organisations in India and their adoption of cloud and Artificial Intelligence (AI) strategies are contributing significantly to the rising demand for data centre services.
Digitalisation is another major factor propelling the growth of the industry. With a population of more than 1.4 billion people, India is witnessing a rapid shift towards digital transactions as smartphone penetration and levels of connectivity rise sharply. This digital transformation, combined with data residency regulations, has led to an increased need for localised data centres, with banks and other financial institutions among the major customers. As India’s data centre industry expands, sustainability and environmental considerations are also gaining prominence. While the country may be behind Europe in terms of innovative data centre initiatives like waste heat recovery (capturing and repurposing heat in heating systems or other industrial processes), the industry is investing in renewable energy sources.
Energy-efficiency measures include advanced cooling techniques that require less water, adopting sustainable construction practices such as using ecofriendly building materials and implementing energy-efficient designs, and taking responsibility for the proper disposal and recycling of electronic waste.
In India, data centres plan to inject equity into renewable power plants while focusing on construction and cooling methods, including liquid immersion cooling and direct contact liquid cooling. Sustainability is a prime area for focus for the data centre industry; these goals include achieving net-zero emissions across operations by 2030 and 100% renewable energy in data centres by 2030. Monitoring data centres to track energy consumption, carbon emissions, and other sustainability metrics is crucial. However, despite the growth of the data centre industry, there are challenges that need to be addressed.
As more data centre providers set up shop in India, often building more centres with the help of government benefits in some states, a price war may lead to some consolidation and affect the overall profitability of these providers. Additionally, India’s data centre skills shortage and supply-chain disruptions lingering from the Covid-19 pandemic are hurdles to overcome.
However, the non-stop demand for data centres, driven by cloud adoption, digitalisation and the rollout of 5G technology – which will lead to even higher data consumption – presents immense growth potential, and the government’s favourable policies further contribute to this positive outlook. For the next five to seven years, expect nothing but rising demand in this industry as it fuels India’s digital transformation.
This article is authored by Vimal Kaw, senior director, products and services, NTT Global Data Centres and Cloud Infrastructure, India.
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