India’s progress towards becoming a true digital economy, backed by progressive government policies, is encouraging domestic and global data centre operators to make huge investments in the country. The pandemic has pushed the demand for cloud across the globe with digital transformation accelerating across industries, and internet becoming a lifeline for people both for work as well as entertainment.  

This shift towards cloud has pushed increased investments in hyper-scale data centers with the global data centre market investments expected to reach ~$200 billion per annum by 2025. 

 But to meet this rising demand, India will require a huge investment in data center and cloud infrastructure over the next three years. Demand is likely to ramp up further due to the imminent rollout of 5G, increasing usage of IoT-enabled devices, data localization and cloud adoption. The businesses are looking to adopt cloud servers and surging cloud applications will make it imperative for businesses to have a reliable and secure IT infrastructure, where data can be stored and processed effectively.  

 Data Centers are the backbone of a digital revolution. The Government of India’s proposed Draft Data Center Policy aims to make India a ‘Global Data Center Hub’. This will provide long-term funds for investments in the sector. State Governments have also been providing incentives to industry players for setting up data center parks. The synergy of technology, legislation, demand, and investments is expected to usher in an era of high growth for India’s DC industry in coming years.

 The market is likely to experience a rapid growth in the forecast period on account of increased investment in big data analytics, artificial intelligence combined with rollout of 5G technology across the country. Further, cloud services are being embraced by businesses in a variety of industries, including banking, financial services, insurance, IT & telecommunications, energy & utilities, media & entertainment, and manufacturing, which is boosting the India Data Center Market Growth. 

Adoption of these technologies would lead to increase in data volume and network bandwidth requirements, thereby resulting in growing demand for data center market in the forecast period. 

 India is also expected to get a share in this growth with investments in the country and the market size was valued at $4.35 billion in 2021 and the Revenue in the Data Center market is projected to reach US$7.54bn in 2022 and by 2027 it is expected to reach $10.09 billion by 2027, growing at a CAGR of 15.07% during 2022-2027.

  The businesses are looking to adopt cloud servers and surging cloud applications will make it imperative for businesses to have a reliable and secure IT infrastructure, where data can be stored and processed effectively.  
The data center market is witnessing significant investment from local and global investors, including hyperscale operators, driven by increased digitalization as a result of COVID-19, government initiatives, and the adoption of AI, IoT, and big data.
India witnessed 16 new projects/expansions in 2021, and some major investors in the market include companies like Bharti Airtel, AWS, Colt Data Centre Services, ST Telemedia Global Data Centres India, NTT Global Data Centers, CtrlS, and Yotta Infrastructure, among others.

Hyperscale operators are also showing increasing interest in the India market, with AWS, Google, and Microsoft investing in the country. Google has cloud regions in Maharashtra and Delhi, Microsoft opened its Maharashtra data center in 2021, with another MoU signed with the Government of Telangana. AWS is also setting up a second in Telengana, in addition to the one in Maharashtra.

India is also witnessing investments by several new entrants, such as AdaniConneX, Ascendas India Trust, Equinix, EverYondr, Digital Realty, Brookfield Infrastructure, Capitalland, and Mantra Group have started investing in Indian Data Centres.The Indian government is taking various measures towards digitalization of the economy, including the Digital India initiative, classification of data centers as infrastructure assets, and proposing a new data localization law, these factors will drive the data center industry in the country.
India has also set an ambitious target to achieve a capacity of 175 GW of renewable energy by the end of 2022, of which 100 GW will be generated via solar energy. It further plans to expand the generation capacity to 450 GW of renewable energy by 2030 as it aims to reduce its fossil-fuel reliance.

Key drivers and trends fuelling market growth: 

• 5G Deployment Increases the Edge data center investments
• Procurement of Renewable Energy in Data Center
• Growing Rack Power Density
• Rise in Investment from Colocation Providers
• Government to Grow Digital Economy & Data Center investments

India data center market – investment analysis
Amazon Web Services (AWS) is investing around $1.6 billion to set up two data centers in Hyderabad. The Chandanvelly data center, which is under construction, is expected to be operational by 2022
As the digitalization of India is a priority for the government, there is an incentive scheme of 120 billion to facilitate the installation of data centers. Moreover, the Indian government aims to invest over $1 billion in the next five years as part of a hyperscale data center scheme.

Over the last year, the market garnered investments in over 20 projects. Maharashtra dominated the market, followed by Tamil Nadu, Uttar Pradesh, Telangana, and other states.
The government of India started an initiative to strengthen IoT growth, which includes developing around 95-99 city projects and more than $100 billion investments in the telecommunication sector by 2022.

India data center market – competitive landscape
Most Indian government data center projects are allocated through a tender process. Vendors garnering these tenders will earn revenues in millions of dollars each year. However, partnerships with large enterprises will add more revenue to these vendors during the forecast period. All the infrastructure providers have a strong presence in the design, installation, and commissioning of data center services. Schneider Electric, Eaton, Cummins, Vertiv, Caterpillar, and ABB are the electrical infrastructure vendors with a strong presence in the Indian market. Also, the global cloud service providers such as AWS, Microsoft, IBM, Oracle, and Google continue to expand their presence with new cloud regions.
  
Prominent data center investors

• Adani Group
• Airtel India (Nxtra Data)
• Amazon Web Services (AWS)
• Bridge Data Centres
• Colt Data Centre Services
• CtrlS
• Mantra Data Centers
• NTT Global Data Centers
• Pi Data Centers
• RackBank
• Reliance Jio Infocomm
• ST Telemedia Global Data Centres
• Sify Technologies
• Web Werks
• Yotta Infrastructure (Hiranandani Group)

 
 Data center growth in India: In India, the demand for hyper-scale data centers has shot up in the last two years as more businesses are moving their IT infrastructure to the Cloud, primarily driven by increasing demand for app-based services and OTT platforms. Enterprises are transforming IT delivery and bringing applications and data processing closer to the users—in a colocation facility at the edge data center.
 Today, we are witnessing more investments into hyperscale Tier IV data centers and data center operators are now building parks instead of isolated buildings. Majority of Hyperscalers are already outsourcing their colocation requirements in India for rapid expansion. International cloud providers are also setting up their captive data centers by availing incentives and benefits by government policies.
 

With this the demand for colocation data centers has been on the rise ever since the question of data nativity became inevitable, even as the need for data driven intelligence and ability to use the power of cloud native AI/ML services is leading to hybrid architectures.
 
IT infrastructure providers

•  Arista Networks                       •    Atos
• Aruba                                      •    Broadcom
• Cisco Systems                        •    Dell Technologies
• Hewlett Packard Enterprise    •    IBM
• Juniper Networks                   •    Lenovo
• NEC Corporation                   •    NetApp
• PureStorage

 
Security & data center: The perspective of security architecture is changing dramatically with the mobile first and cloud first world, where the security architecture must seamlessly cover the distributed Data Center scenario. The other trend of dissolution of security perimeter with Cloud becoming the Data Center coupled with various SaaS services has resulted in a perspective of Zero Trust Network Access (ZTNA) and Cloud Access Security Brokerage (CASB). These very measures have been of great help to seamlessly enable Work-from-Home access without any disruption and with all the confidence.
Achieving 100% uptime for the data center is easy, but maintaining it continuously is only possible with a sustainable model that includes strong process management and automation supporting process strengthening. 

New entrants

• Equinix (GPX Global Systems)
• EverYondr
• Princeton Digital Group (PDG)

We can’t deny the fact that connectivity is an essential precondition and data centers are the warehouses of the digital economy, providing a home not only for the data itself, but also for the platforms and applications that have become so ubiquitous in the modern world. More and more Indian organisations are looking to transform into digital-first businesses, with a natural progression towards increased cloud-led innovation across the board. As a result, 40% of new enterprise applications in India are likely to be cloud-native by 2022.

The future of data centres is AIOps and SecOps, to ensure our data centers are human-free. As 5G is rolled-out our terrestrial networks will require big upgrades or they will choke. The immediate future is applications moving nearer to the data/consumer and the Edge is the big enabler.

 Going forward, there will be the introduction of Fog computing, which is a decentralized computing infrastructure in which data, compute, storage and applications are located somewhere between the data source and the cloud. Like edge computing, fog computing brings the advantages and power of the cloud closer to where data is created and acted upon.

 Finally, Indian data center services footprint which stands at an estimated five million square feet is likely to cross 30 million square feet in the next decade. Today, hyperscale data center space in the country occupies just about 10% of the overall third party data center (DC) market.