AI and 5G Revolutionize India's Data Centre Industry: Report

A report by Avendus highlights a transformative phase for India's data centre industry. The rise in AI and the rollout of 5G are key drivers. Increased demand for high-performance computing infrastructure, including AI-centric cloud solutions, is accelerating this digital evolution.

The data centre industry in India is undergoing a significant transformation fueled by advancements in Artificial Intelligence (AI) and the expansion of 5G technologies, according to a report by Avendus, a leading financial services firm. The surge in demand for high-performance computing infrastructure is driving this change, with particular emphasis on high-end GPU servers and AI-centric cloud solutions.

The Indian data centre sector is experiencing unprecedented growth due to AI-driven demand. Presently, India is home to around 1,300 AI companies, and AI is expected to substantially increase the need for high-density server racks, ranging from 5 to 50 kW. The rising demand for data centres is a result of widespread adoption of cloud services, increased AI usage, data localization requirements, 5G rollout, higher bandwidth services, a surge in data creation and consumption, and enterprises' business continuity and backup plans.

This rise in server density will also necessitate higher cooling requirements. The generative AI market in India is projected to grow at a compound annual growth rate (CAGR) of 28 per cent from 2023 to 2030, leading to robust demand for data centres. Over the next four years, the demand for AI-enabled data centres in India is estimated at around 500 megawatts (MW), driven by the rapid expansion of digital services and the increasing need for low-latency data usage across various sectors.

India's current installed data centre capacity stands at 1,011 MW, with approximately 94 per cent located in seven major cities. Mumbai and Chennai are at the forefront, benefiting from well-established infrastructure networks. Mumbai, which accounts for 48 per cent of India's total data centre capacity, profits from submarine landing stations, reliable power, and dense fibre infrastructure. The city is expected to see over 35 per cent of the additional capacity in the next five years.

Chennai is also experiencing substantial demand due to similar infrastructure benefits and the recent MIST cable landing, poised to attract additional demand from the Asia-Pacific (APAC) region. Delhi and Kolkata are key contributors in North and East India, respectively, with Delhi projected to contribute around 15 per cent of the incremental capacity.

The Avendus report indicates that 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, demanding an estimated capital expenditure of approximately USD 25 billion, offering substantial opportunities for investors. (ANI)

(With inputs from agencies.)