(IANS) As digital adoption grows amid the pandemic across the spectrum, the data centre industry in India is likely to touch $1.2 billion in the fiscal 2020 and is expected to log a rapid 25-30 per cent compound annual growth rate CAGR to reach $4.5-$5 billion by fiscal 2025, a new report said on Monday.
The Indian data centre industry, which accounts for 1-2 per cent of the global pie, is estimated to have clocked a modest CAGR of 15-20% since fiscal 2016 to touch $1billion in fiscal 2019, according to a Crisil Research report.
The data centre growth rode on a sharp increase in Internet penetration from 30 per cent in fiscal 2016 to 55 per cent in fiscal 2019.
“Also, on account of Covid-19, data consumption has seen sharp a 38 per cent rise on-year in the first quarter of the financial year 2021,” the findings showed.
The growth drivers include an exponential surge in data being generated and a growing need for local data storage in line with the government’s thrust on data localisation.
The data centre industry has been largely concentrated in top four cities, with Mumbai, Delhi, Bengaluru and Chennai accounting for 60 per cent of total data centre sites and more than 75 per cent in terms of IT load capacities.
In terms of IT load capacities, Mumbai alone accounts for over 40 per cent of total installed capacity, given the availability of required infrastructure in terms of adequate linkages with global cable landing stations, reliable power supply, broadband connectivity and skilled manpower.
“Some state governments already have incentives in place for the data centre industry. For instance, Maharashtra and Telangana are offering incentives in land and electricity along with a special single-window clearance for permissions to set up data centres,” the report mentioned.
However, the report expects the share of top 4 cities to decline marginally in the next five years as lack of space and higher rental costs along with improved infrastructure availability in next rung cities leads to some larger hyperscale data centres being set up in those cities.
The industry capacity, which stood at 360MW in fiscal 2020, is expected to expand more than threefold to reach 1,100-1,200MW by fiscal 2025 “on the back of $4-5 billion investments announced over the past three years for both brownfield and greenfield expansion of projects”.
The increase in data volume, said the report, would be supported by high growth in e-commerce, increase in usage of social media, greater preference for over the top (OTT) platforms, the government’s impetus to the Digital India initiative and rapid digitalisation of services across industries (Industry 4.0 and 5G).
“Data localisation norms initiated by the government and regulators, that mandates storage of sensitive data within India, which, in turn, would support development of local data centers,” it added.
According to Nasscom, as of fiscal 2020, more than three-fourth of the total IT infrastructure spend was concentrated towards captive and co-location based operating models.
By fiscal 2025, however, the share of infrastructure-as-a-service (IaaS) in IT infrastructure spends is forecast to increase to more than 40 per cent.
The Crisil research expects the shift towards IaaS to continue as rapid adoption of Industry 4.0-led revolution leads to exponential growth in data volume and increases the need for scalability of resources.