India data centre capacity to double in 3 years, capex requirement US$ 6 billion (Rs. 50,000 crore).

The Indian data centre industry is undergoing rapid expansion, with projected capacity doubling from 0.9 Gigawatts (GW) in 2023 to nearly 2 GW by 2026, requiring an estimated US$ 6 billion (Rs. 50,000 crore) in capital expenditure over the next three years. Despite contributing 20% of global data, India's data centre capacity share remains at 3%, though it leads in mobile data usage worldwide. Initiatives such as data localization, tax incentives, and state-level cost-saving measures are expected to be pivotal in attracting investments. Ms. Puja Jalan, Associate Director at CareEdge Ratings, underscores the need to address challenges in project execution, including land and equipment availability and vendor ecosystem management.

Moreover, the cost per megawatt (MW) for data centre setup has risen to US$ 7.2- 8.4 million (Rs. 60-70 crore) from an average of US$ 4.8-5.4 million (Rs. 40- 45 crore). Despite these challenges, the industry has seen increased absorption rates, rising from 82% in 2019 to 93% in 2023, accompanied by a robust 25% CAGR in revenue for industry players from 2016-17 to 2022-23, according to CareEdge Ratings' report.

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