Tech

India data centers expansion expected to invest up to 1.2 lakh crore over next five years: report

Data center capacity expansion in India by foreign and local firms is expected to add investments of 1.05 lakh to 1.2 lakh crore over the next five years, credit rating agency ICRA said on Tuesday.

The Indian data center market is witnessing healthy growth, mainly driven by large hyperscalers like Amazon Web Services, Google, Microsoft, Facebook, IBM, Uber, Dropbox, etc., who are outsourcing their storage needs to third-party data center providers, ICRA said.

Indian companies like Hiranandani Group, Adani Group and foreign investors like Amazon, EdgeConnex, Microsoft, CapitaLand and Mantra Group have started investing in Indian data centers.

“Together with them, existing players such as NTT, CtrlS, Nxtra and STT India are also expanding their capacities. A total of 3900-4100MW of capacity is expected to be added over the next five years with investments of Rs.1.05-1.20 crore,” ICRA said.

Industry revenue is expected to grow at a compound annual growth rate (CAGR) of approximately 18-19 percent during fiscal 2022-2024, compared to a CAGR growth of 24 percent between fiscal years 2018-2021, supported by a Increasing rack capacity utilization and ramping up new data centers.

With increasing revenues and better absorption of fixed costs, operating margins for data center companies should improve and remain in the 40 to 42 percent range.

“Favorable regulatory support, fast-growing cloud computing, increasing internet penetration, government efforts in the digital economy, adoption of new technologies (IoT, 5G, etc.), and growing need for hyperscalers are some of the key factors driving the Driving demand for data centers The sector is expected to see a five-fold increase in capacity over the next five years,” said Rajeshwar Burla, ICRA’s Head of Corporate Ratings Group.

In addition, the government has granted infrastructure status to data centers in the 2022-23 Union Budget, which will allow stakeholders to access longer-term debt at competitive interest rates and access foreign financing through the route of external commercial borrowing, he said.


https://gadgets360.com/telecom/news/indian-data-centres-capacity-expansion-expected-investments-1-2-lakh-crore-over-next-five-years-icra-3005147 India data centers expansion expected to invest up to 1.2 lakh crore over next five years: report

Ryan Sederquist

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