India Data Center Market Research Report: Forecast (2024-2030)

Market Definition

Data Centers are physical facilities at a location that are used to provide access to IT infrastructure necessary for providing and supporting services such as storage services for data and applications, network connectivity for seamless real-time connections, and computing power. These services offered by the data centers are dearly desired in industries including banking, financial services, & Insurance, healthcare, telecommunication, government, energy & utilities, and Others (media & entertainment, etc.)

Market Insights & Analysis: India Data Center Market (2024-30):

The India Data Center Market size is valued at USD 3.2 billion in 2024 & is estimated to grow at a CAGR of around 6.5% during the forecast period, i.e., 2024-30. The growth in the data center market of India is driven by the combination of factors playing out together, enabling an ecosystem that will provide massive growth opportunities for businesses operating or planning to venture into this market. These key factors include the push from the government of India through policy changes for the localization of data generated in the country and the launch of the “Digital India” campaign necessary for the development of revolutionary digital products such as UPI, BHIM, digilocker, etc. Also, the massive rise in online transactions and e-commerce has further fueled the growth in the market. The expansion and growth in industries especially the healthcare and BFSI industry generate sensitive and massive data that needs to be securely stored. India also has a huge IT and telecommunication industry that generates massive data. The development of such scenarios presents an important aspect driving the Indian Data Center Market.

Also, the country with its around 1.4 billion population is a huge market, with the significant and growing penetration of smartphones, cheap & high-speed internet, and bank accounts (necessary for online payments) indicating a solid foundation for the market. Presently, India is the fastest-growing large economy in the world and is on the path to becoming the 3^rd largest economy by the end of this decade. The massive population, growing middle class, with rising disposable income doing online transactions, browsing the internet, and using digital products and services accessible in the country will generate massive data and increase the critical need for the high computing power necessary to process it.

Additionally, the massive deployment of 5G, wider consumption of consumer electronics, and smart devices, Internet of Things (IoT), and development of indigenous AI technologies in the country will further augment the size & volume of the market. With the immense growth in the market due to the enormous data generation enabling the need for data literacy in the country, banking on this educational institution has also launched programs related to it highlighting the presence of a skilled workforce in the country.  

However, there are some challenges involved such as the immense cost associated with the installation, running, and maintenance cost of the data centers. Additionally, the functioning of data centers consumes enormous electricity which can significantly impact the environment. The world is moving towards sustainability and adopting measures that mitigate its CO₂ and GHG emissions in the wake of global warming and climate change. India is also adopting sustainable and environment-friendly policies aligning with its sustainable goals, due to which the country is witnessing a trend of green data centers that focus on energy efficiency to minimize their environmental impact. The development of these scenarios indicates the enormous growth opportunities present in the Indian Data Center Market over the forecasted period.

India Data Center Market Driver:

Increasing Digitalization Driving Market Growth – There is a growing push towards digitalization that is driving huge growth in the India Data Center Market. The government of India aligning with its e-governance place in the wake of rapid digitalization of the country has launched campaigns such as “Digital India” which aims to develop and shape the digital economy of the country. Additionally, the government has also seen the dire need for data localization learning from the scenario of Western countries unilaterally removing Russia from the global SWIFT payment system, a medium that should not have been touched for political motives. Given that much of India’s data is stored outside the country and to maintain its strategic autonomy India is witnessing the push for data localization. Furthermore, the development of digital payment systems such as UPI, enabled the entire ecosystem of online payment applications.

Furthermore, the rising consumption of consumer electronics and smart devices, the adoption of technologies such as the Internet of Things (IoT), the growing digital population browsing the Internet, purchasing online through e-commerce platforms, digital expansion of industries especially BFSI, and healthcare industry, and finally the presence of giant IT and telecommunication industry generate massive data and requires enormous computing power. These scenarios provide a large growth opportunity in the data center market of India over the forecasted period.

India Data Center Market Opportunity:

5G Deployment to Offer Lucrative Growth Opportunities – The telecommunication industry massively utilizes data centers for optimal working. The deployment of 5G networks across the length and breadth of India will present a huge opportunity for the market players. As the 5G network gets deployed leading to increasing network connectivity, through smart electronic devices, people, and digital services enabling the huge need for data centers capable of processing such huge amounts of data without latency. Additionally, the availability of 5G will have a transformation impact on various industries such as healthcare, and gaming industry. Such impact is due to the combination of 5G with modern technologies such as virtual reality (VR), and augmented reality (AR), and also the fast adoption of the Internet of Things and Metaverse. These scenarios will lead to the massive generation of data and the need for computing power, highlighting the lucrative growth opportunities available in the Indian data center industry. 

India Data Center Market Challenge:

Huge Costs Associated with the Data Centers to Hinder Revenue Growth – The setup of a data center depending on its type requires a substantial investment, and the addition of running and doing maintenance on it further raises its costs. Also, these data centers constantly run over a prolonged time and consume massive amounts of electricity. For instance,

• In July 2023, the International Energy Agency in its “Tracking Clean Energy Progress 2023” report highlighted that global data centers and data transmission networks, each consuming 1-1.5% of the total electricity consumed globally. Additionally, they are also responsible for ~1% of the energy-related GHG emissions.

The impact of these costs might impact the growth in the market due to the massive costs that come with it. However, the innovation in the data center for effective operational efficiency and energy consumption can mitigate such challenges.

India Data Center Market Trend:

Rising Adoption of Cloud Services – India is witnessing a rise in the demand for cloud services especially as the digital infrastructure is rapidly improving providing opportunities to develop products and services based on modern technologies such as virtual reality, augmented reality, smart IoT devices, and artificial intelligence. As the country focuses on developing its indigenous AI or generative AI like a ChatGPT, cloud services will become ever more crucial. This will enable even small startups to develop their digital products rather than owning the necessary piece of hardware themselves which will not be economical for them. For instance,

• In August 2023, EY-FICCI conducted a study in which they found that 80% of organizations use the cloud to enable data and analytics capabilities, 78% have more than 30% of data on the cloud, and 58% are moving new workloads to the cloud.

The trend of rising adoption of cloud points to the need for cloud services and this scenario will further enable the future outlook for the India Data Center Market over the forecasted period.

India Data Center Market (2024-30): Segmentation Analysis

The India Data Center Market study of MarkNtel Advisors evaluates & highlights the major trends and influencing factors in each segment. It includes predictions for the period 2024–2030 at the national level. Based on the analysis, the market has been further classified as:

Based on End User:

• Banking, Financial Services and Insurance (BFSI)
• Telecommunication & IT
• Government
• Energy & Utility
• Healthcare
• Others (Media & Entertainment, Manufacturing, etc.)

The telecommunication & IT segment holds the largest market share. This is because extensive deployment of telecommunication is needed for a vast country like India and also given the fact that India is one of the largest IT services providers in the global.  Such a scenario is likely to remain in the future outlook of the segment over the forecasted period. Additionally, BFSI and healthcare will likely see a massive jump in the need for the data center in the future.

Based on Type:

• Enterprise Data Centers
• Colocation Data Centers
• Cloud Data Centers
• Edge Data Centers

The cloud data centers segment occupies the largest market share. This is mostly likely due to the business in India adopting massively the cloud services as the country will witness a high speed and cheap internet, making it a favorable service. Due to such a trend, we have witnessed that the leading players in the market operating in India have announced massive investments in the data centers and the vast majority of them have gone to the cloud-hyper scale data centers. Such development points to the increasing demand for data centers in India and the rapid growth in the India Data Center Market.

India Data Center Market (2024-30): Regional Projections

Geographically, the India Data Center Market expands across:

• North
• South
• East
• West

The western region of India holds the largest number of data centers in the country, primarily due to states like Maharashtra and Gujarat. Maharashtra due to the presence of Mumbai, the commercial capital of the country, and Navi Mumbai. The state alone has a GDP of more than USD 500 billion, indicating the massive economic activity and industrial presence in the region. Additionally, the region's proximity to the submarine cables on the western coastline coming from Europe and the Middle East and going towards Southeast Asia adds to the region have larger concentration of data centers. These factors point that the region will likely maintain its dominance and contribute significantly towards market growth & expansion.

India Data Center Industry Recent Development:

• August 2024: CtrlS has acquired land in Patna, Bihar to set up a greenfield edge data center, for this company is planning to invest INR 400 crore. The data center will have the capacity for 1,000 racks and an IT load capacity of 10 MW.

Gain a Competitive Edge with Our India Data Center Market Report

1. India Data Center Market Report by MarkNtel Advisors provides a detailed & thorough analysis of market size & share, growth rate, competitive landscape, and key players. This comprehensive analysis helps businesses gain a holistic understanding of the market dynamics & make informed decisions.
2. This report also highlights current market trends & future projections, allowing businesses to identify emerging opportunities & potential challenges. By understanding market forecasts, companies can align their strategies & stay ahead of the competition.
3. India Data Center Market Report aids in assessing & mitigating risks associated with entering or operating in the market. By understanding market dynamics, regulatory frameworks, and potential challenges, businesses can develop strategies to minimize risks & optimize their operations.