Business News: Domestic data centre sector to add 508 MW capacity by 2023

This has forced businesses to scale up their digital infrastructure, generating a strong demand for data centres. Around 508 MW of supply is expected to be added between H2 2021 and 2023. (Representative image)

The data centre industry is expected to double its capacity to 1,008 MW by 2023 as Covid accelerated India’s digital transformation, with consumers relying more on digital services for their professional and personal needs. This has forced businesses to scale up their digital infrastructure, generating a strong demand for data centres. Around 508 MW of supply is expected to be added between H2 2021 and 2023.

JLL India’s head (data centre advisory) Rachit Mohan pointed out that the demand momentum, which picked up pace in 2020, continued to grow unabated. The industry witnessed 46.4 MW (mega watt) absorption during H1 2021 — equivalent to 90% of supply addition during the period (January-June 2021), indicating robust absorption growth.

Demand has been expanding rapidly due to increasing digital usage emerging from distributed workforce, growing data security concerns and business disruptions.

Banking and financial services are adopting hybrid options to meet digital growth. Home-grown video and gaming platforms, in the midst of robust user growth, are also fuelling the demand, he explained. JLL India chief economist Samantak Das said global investors and data centre players have increased their commitment during the last six months, announcing joint ventures with operators to set up sites.

‘Investment commitments to the tune of $3 billion (around Rs 22,000 crore) highlight the growth potential, with the data centre industry expected to double its capacity and cross the 1GW-mark by 2023. Mumbai, which currently accounts for 45% of the total capacity, is expected to further add 267 MW between now and 2023. Various states have also been providing incentives for the data centre industry as they want to join the next leg of technological change,’ he noted.

Operators are adopting large land acquisition strategies to fulfill the long-term requirements of hyper scalers (large cloud players and occupiers with massive computing requirements). These operators would provide occupiers with flexibility in terms of availability zones, fiber pathways and power provisions required for large-scale expansions in less time. Players are also adopting strategic alliances by investing in new submarine cables to meet the growing demand, JLL said.

The telecom industry has been gearing up for rolling out 5G services as three telecom players have started field trials. As per network analyst firm Ookla, the median downloads speeds are likely to be 10 times faster in 5G as compared to 4G-LTE technology. This will lead to a sharp rise in data usage and related applications that would rely on data centres, it added.

According to Ericsson’s mobility report 2021, smartphone subscriptions are expected to grow at a CAGR of 7%, from 810 million in 2020 to more than 1.2 billion by 2026. Such subscriptions, which accounted for 72% of total mobile subscriptions in 2020, are projected to constitute over 98% in 2026.