India’s Data Centre Boom: AI and 5G Transformations
The data centre industry in India is undergoing a major transformation, driven by advancements in Artificial Intelligence (AI) and the rollout of 5G technologies, according to a report by Avendus, a leading financial service provider.
This shift is fueled by a surge in demand for high-performance computing infrastructure, including high-end GPU servers and AI-centric cloud solutions. India currently hosts around 1,300 AI companies, significantly increasing the need for high-density server racks, ranging from 5 to 50 kW.
The demand for data centres is accelerating due to companies adopting cloud services, higher uses of AI services, requirements for data localization, the rollout of 5G, increased bandwidth services, an explosion in data creation and consumption, and business continuity and backup plans of enterprises. This increase in server density will also drive higher cooling requirements.
The generative AI market in India is projected to grow at a compound annual growth rate (CAGR) of 28% from 2023 to 2030, translating into strong demand for data centres. Over the next four years, the anticipated demand for AI-enabled data centres in India is estimated at around 500 megawatts (MW). This surge is attributed to the rapid expansion of digital services and the growing need for low-latency data usage across various sectors.
India’s current installed data centre capacity stands at 1,011 MW, with approximately 94% located in seven major cities. Mumbai and Chennai are leading the charge, thanks to their well-established infrastructure networks. Mumbai accounts for 48% of the total data centre capacity in India, benefiting from its submarine landing stations, reliable power, and dense fibre infrastructure. The city is expected to see over 35% of the total additional capacity in the next five years. Chennai is also witnessing substantial demand due to its similar infrastructure advantages and the recent landing of the MIST cable, which is likely to attract additional demand from the Asia-Pacific (APAC) region.
Delhi and Kolkata are key players in North and East India, respectively, with Delhi projected to contribute around 15% of the incremental capacity. The Avendus report says the Indian data centre industry is maturing with increased long-term stable capital inflows, driven by digitization and data localization trends. Developers have a pipeline of over 3 gigawatts (GW) set to be delivered over the next decade, requiring an estimated capital expenditure of approximately USD 25 billion, presenting a great opportunity for investors.
Doubts Revealed
Data Centre -: A data centre is a place where many computers and servers are kept to store and manage data. It’s like a big library but for digital information.
AI -: AI stands for Artificial Intelligence. It’s a technology that allows computers to think and learn like humans. For example, Siri or Alexa are AI programs.
5G -: 5G is the fifth generation of mobile network technology. It is much faster than the previous 4G, allowing for quicker internet and better connectivity.
Avendus -: Avendus is a company that provides financial services and advice. They help businesses make smart decisions about money.
CAGR -: CAGR stands for Compound Annual Growth Rate. It shows how much something grows over a period of time, like how fast a plant grows each year.
Generative AI -: Generative AI is a type of artificial intelligence that can create new content, like writing stories or making art. It’s like a robot that can be creative.
Mumbai -: Mumbai is a big city in India, known for being the financial capital of the country. It’s like the New York City of India.
Chennai -: Chennai is another major city in India, located in the southern part of the country. It’s known for its culture and technology industries.