CBRE Report Projects India’s Data Centre Market to Surpass $100 Billion by 2027

India's data centre sector is rapidly expanding, driven by significant investments and increased capacity. According to a report by CBRE South Asia Pvt Ltd, total investments in the sector are expected to exceed $100 billion by 2027, reflecting the key role data centres play in supporting India’s growing digital economy.

This surge in growth is driven by various factors, including the increasing demand for digital infrastructure as businesses and consumers move towards cloud services, data-driven technologies, and remote work models. Technological advancements, such as the deployment of 5G networks and the rise of artificial intelligence (AI), are further intensifying the need for robust data infrastructure. 

At the same time, government initiatives such as the National Data Centre Policy are providing the necessary regulatory support, which encourages both domestic and international investments. As a result, India is positioning itself as a key global player in the digital infrastructure space, capable of supporting emerging technologies and handling the increasing volumes of data generated by businesses and consumers alike.

Current Data Centre Capacity and Projections

• Existing Capacity: 1,255 MW
• Projected by 2024 End: 1,600 MW
• Projected by 2025: 2,070 MW

As of September 2024, India’s total data centre stock, measured in terms of land area, spans 19 million square feet (msf). This footprint is projected to grow to 31 msf by the end of 2025, signifying substantial expansion to meet growing demand.

Key Investment Drivers

Several factors are fueling the growth of data centres in India:

Digital Consumption: The rise in internet users, cloud adoption, and e-commerce activities has led to a surge in data usage, driving the need for robust digital infrastructure.

Government Policies: State-level incentives and initiatives to develop digital ecosystems have encouraged domestic and global investments in the sector.

Sectoral Demand: Industries such as banking, financial services, insurance (BFSI), telecommunications, and technology are major contributors to data centre demand.

Global Participation: Private equity funds, real estate developers, and global operators have made significant investments in Indian data centres, aiming to capitalize on the expanding market.

Leading Cities for Data Centre Growth in India

India’s data centre market is expanding rapidly, with Mumbai, Chennai, Delhi-NCR, and Bengaluru at the forefront of this growth. Together, these cities account for 90% of the country’s total data centre capacity, forming the backbone of India’s digital infrastructure.

Key Highlights:

• Mumbai: The largest hub, benefiting from submarine cable landing stations and proximity to financial institutions.
• Chennai: A coastal city with excellent connectivity, emerging as a significant player in southern India.
• Delhi-NCR: A prime location in northern India, catering to businesses, government offices, and a massive user base.
• Bengaluru: Leveraging its IT expertise, it serves as a key hub for technology-driven industries.

These cities also account for nearly 475 MW of new data centre capacity currently under construction, ensuring continued leadership in the sector.

Emerging Opportunities in Tier-II Cities

Tier-II cities are becoming viable alternatives for data centre projects due to cost advantages and growing regional demand. Cities like Ahmedabad, Kochi, Visakhapatnam, and Lucknow are attracting attention.

Why Tier-II Cities Are Gaining Momentum?

Lower Operating Costs: Affordable land, labor, and operational expenses.

Increased Data Consumption: Rising digital adoption in smaller cities and rural areas.

Land Availability: Ample space for large-scale projects and potential for renewable energy integration.

Benefits of Decentralization:

• Reduced reliance on major metro hubs.
• Lower latency for regional users by bringing infrastructure closer to them.
• Strengthened disaster recovery systems through geographic diversity.
• IInvestment Trends and Market Impact

Over the past six years, the Indian data centre market has attracted $60 billion in investments. The sector is projected to receive $100 billion by 2027, marking nearly a twofold increase. This growth highlights the data centre industry's essential role in supporting India's digital economy.

Key Technological Areas Supported by Investment:

Artificial Intelligence (AI): Data centres will be crucial for AI applications, providing the necessary computational power for faster data processing and analytics.

5G Technology: With the ongoing rollout of 5G networks, data centres will be integral in supporting low-latency applications and ensuring high-speed data transfers.

Cloud Computing: The increasing demand for cloud services will further drive the need for more data centre capacity to accommodate the growing volume of data and services.

These investments will play a central role in facilitating the adoption of next-generation technologies, positioning data centres as the foundation for India's expanding digital infrastructure.

Insights from Industry Leaders

Industry leaders emphasize that the growth of India’s data centre market is a direct result of the combined impact of digital consumption, government policies, and robust investments from both domestic and international players. Anshuman Magazine, Chairman and CEO of CBRE India, pointed out that the sector's expansion is driven by the rising demand for digital infrastructure, including the rapid adoption of internet services, cloud technologies, and e-commerce. The government's supportive initiatives and incentives have also created a conducive environment for growth, attracting significant capital inflow into the market.

Ram Chandnani, Managing Director of Advisory and Transaction Services at CBRE India, further emphasized the strategic importance of data centres in India’s digital ecosystem. He noted that the sector's expansion is critical not just to meet current demand but to prepare for the future needs of emerging technologies such as artificial intelligence (AI), 5G, and cloud computing. According to Chandnani, the development of cutting-edge data centres will play a pivotal role in enabling India to maintain its competitive edge globally, positioning the country as a leader in the next wave of technological advancements.

Way Forward

India’s data centre market is set to continue its rapid expansion, fueled by rising digital consumption, technological advancements, and significant investments. The shift towards Tier-II cities, in addition to growth in major urban hubs, will decentralize the data centre landscape, opening up new opportunities for businesses across the country. Cities like Ahmedabad, Kochi, Visakhapatnam, and Lucknow, with their lower operating costs and growing data consumption, are expected to become key locations for future data centre projects.