India has been experiencing a notable rise in its data centre capacity, primarily driven by strict data localization regulations established by the Reserve Bank of India (RBI). Analysts at Jefferies have projected robust growth for India's data centre sector, foreseeing a compound annual growth rate (CAGR) exceeding 50%. They anticipate that by 2030, the contribution of data centres to India's power demand will escalate to 6%, a significant increase from the current level of less than 1%.
The surge in India's data centre industry gained momentum initially in 2021 due to disruptions in HDFC-Mastercard's operations stemming from data centre outages. Jefferies analysts noted that India's data centre capacity is growing at a CAGR of over 50% and is expected to account for 6% of the country's power demand by 2030, up from less than 1%.
To meet this growing demand, investments in power generation, transmission, and distribution (T&D) are anticipated to increase substantially, reaching $ 280 billion from FY24E-30E, a 2.2-fold increase compared to FY17-23.
Globally, there has been a rapid increase in demand for colocation data centre space, yet new constructions have only partially satisfied this burgeoning demand. Jefferies emphasized that additional power generation and grid capacity will be necessary to meet the escalating demand for data centres, which has also contributed to rising rents for wholesale data centres.
In India, the expanding demand for data centres is expected to have a significant impact on the energy sector, prompting substantial investments in power generation and infrastructure. Key Indian companies identified as major beneficiaries of this growing data centre expenditure include Siemens, ABB India, Larsen & Toubro (L&T), KEI Industries, Voltas, and Bluestar.
