India sees 21 pc growth in data centre absorption, demand surges from tier 2, 3 cities

New Delhi: India saw 21 per cent growth in data centre absorption in the first half this year — from 778 megawatts (MW) capacity in H1 2023 to nearly 942 MW in H1 2024 — as demand for edge data centres surged from tier 2 and 3 cities, a report showed on Wednesday.

Approximately 71 MW of IT capacity was added across key data centre micro-markets in the January-June period, according to Savills India, a global real estate advisory firm. Concurrently, the market witnessed transactions of around 200 MW in IT capacity during this period.

The market is expected to grow to approximately 400 MW IT capacity by the end of 2024.

The demand was driven by hyper scalers, banking, financial services and insurance (BSFI), IT and ITeS and service sectors, all relying heavily on data centre operators for colocation and related services, the report mentioned.

“We project a strong demand for data centre capacity in India by the end of 2024, with an estimated requirement of 400 MW across major cities,” said Srihari Srinivasan, Director and Lead Data Centre Services, Savills India.

While supply is expected to reach 350 MW during the same period, data centre operators are expanding their service offerings beyond colocation to include networking, cloud solutions, specialised hardware like GPUs, and other managed services.

Mumbai led the data centre market with a substantial 54.9 per cent share of the total capacity, followed by Chennai (12.3 per cent), Bengaluru (8.2 per cent) and Pune (7.2 per cent).

Hyperscalers accounted for 22 per cent of the total stock, while enterprises held 10 per cent.

The remaining 68 per cent was utilised by a combination of hyper scalers and enterprises, showcasing a diverse utilisation pattern within the data centre industry, the report said.

“This growth is being driven by surging internet usage, the rise of 5G and the need for ultra-low latency for mobiles, which is also creating a growing demand for edge data centres in specific areas,” Srinivasan added.

Furthermore, the increasing adoption of AI and IoT across various industries is fueling the need for data centre services, with GPU-powered solutions playing a key role in addressing these demands.