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Indian data center sector to require US$ 3.7 billion of investment by 2023 to meet demand: JLL

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India’s data center sector will require investment of US$ 3.7 billion over the next three years in order to fulfill the 6 million sq. ft greenfield development opportunity for the industry, a JLL report titled ‘2020 India Data Center Market Update’ stated.

“India’s colocation data center industry witnessed unprecedented absorption of 102 MW during 2020, notching higher absorption than most key markets of Europe and America. Fueled by longer-term trends of rising cloud adoption, increasing digitisation and progressive legislation, we anticipate increased demand for colocation space nationwide,” said Rachit Mohan, Head, Data Center Advisory (India), JLL.

“Rising demand led data center operators and developers to pursue ambitious expansion plans, while some adopted the acquisition route to enter Indian markets, which we expect to continue. Colo capacity grew by around 28 per cent to reach 447 MW in 2020 from 350 MW in 2019,” added Mohan. 

As the data centre landscape continues to evolve, the industry is expected to grow exponentially to reach 1,007 MW by 2023 from its existing capacity of 447 MW. With growing reliance on digital connectivity, demand is likely to ramp up further due to the imminent rollout of 5G rollout, IoT-linked devices, data localisation and cloud adoption.

Mumbai and Chennai are expected to drive 73 per cent of the sector’s total capacity addition during 2021-23, while other cities like Hyderabad and Delhi NCR emerging as new hotspots. 

“India’s data center industry is expected to add 560 MW during 2021-23 leading to a real estate requirement of 6 mn sq ft. The supply addition will be complemented by densification of racks and servers, sustainable energy sourcing and use of indigenous resources. Rising demand is leading operators to pursue ambitious expansion plans, while some are adopting the acquisition route to enter Indian markets. Various policies and reforms brought in by the Government with an aim to turn India into a ‘Global Data Hub’ have provided necessary measures to achieve this goal,” said Dr Samantak Das, Chief Economist and Head, Research & REIS (India), JLL.  

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