India's Data Center Boom: AI and 5G Fuel Massive Growth and Investment

India Data Center Boom: A $4 Billion Opportunity

The reasons behind Indian data center development are the widespread AI adoption, cloud storage solutions, and the nationwide rollout of 5G technology. While building the country's digital infrastructure, India is witnessing a meteoric rise in demand for scalable and secure data centers. India is becoming a major player in the global digital economy with this insurgence. According to Rachit Mohan, APAC Lead for Data Centre Leasing at JLL India, "The DC industry is expected to add a staggering 604 MW of capacity in the next two and a half years (H2 2024-2026). AI-driven infrastructure, coupled with 5G, is transforming India's digital landscape, and the country is well-positioned to lead the global tech race." According to Samantak Das, Chief Economist at JLL India, "This growth will not only spur demand for specialised skills but also create opportunities across backward-linked industries, which will reinforce India's digital infrastructure."

India's data centre industry set for massive growth with AI, 5G, and cloud adoption

India's thriving data centre industry is poised to grow manifold and attract large investments, backed by the growing use of artificial intelligence (AI) across industries, widespread adoption of cloud storage solutions, and an accelerated rollout of 5G technology across the country. This convergence of transformative technologies is driving unprecedented demand for robust, scalable, and secure data infrastructure to support India's rapidly evolving digital ecosystem. Amid this demand surge, data centres are emerging as an attractive growth opportunity for global institutional investors and leading developers. Data centre capacity in the country is expected to rise 66% by 2026, attracting about $4 billion in investments and adding assets of more than 7.3 million sq ft, according to property consultancy JLL India. "India is rapidly establishing itself as a global centre for AI innovation and data centre growth. The DC (data centre) industry is expected to add a staggering 604 MW capacity in the next two and a half years (H2 2024-2026)," said Rachit Mohan, APAC lead-data centre leasing, JLL. "The push for AI-ready infrastructure, combined with the transformative influence of 5G, is revolutionising India's digital ecosystem and positioning the country as a leader in technological advancements." He said Navi Mumbai is emerging as a key data centre location, with potential demand expected to reach 800 MW in a few years. "As digitisation continues to grow in India, data centres are becoming increasingly essential for various sectors such as cloud computing, digital payments & services, e-commerce and emerging technology like AI. India is a key market for us, playing a central role in our ambitious growth strategy and supporting our expansion plans," Pratap Mane, president & country head-India at Colt DCS, told ET. Earlier this week, COLT DCS, a hyperscale and large enterprise data centre operator, entered an alliance with RMZ to cater to the increasing demand for data centres and launch a platform to develop digital infrastructure in the Indian market, with an investment of $1.7 billion. Global data centre operator Princeton Digital Group inked a strategic partnership with K Raheja Corp-backed Mindspace Business Parks REIT to set up the former's largest data centre campus in India, at Mindspace Airoli West. India's data centre industry has been witness to several investments in the past two years. "Among the key markets, the Mumbai region is expected to maintain its market leadership, while we anticipate significant growth in Chennai and other regions. This expansion is not only driving demand for specialised skills but also creating opportunities across backward-linked industries," said Samantak Das, chief economist, JLL India. Other factors such as the submarine cable infrastructure linking Mumbai and Chennai to Singapore, Southeast Asia, Europe, and the Middle East will help position India as a more attractive Asia Pacific location for data centre development, expansion, and investment in the years to come, according to JLL. It said the boom in data centres is expected to spur innovation, create jobs, and bolster digital infra.

AI, 5G, cloud drive India's data centre surge, push institutional investments

India's data center capacity is projected to surge by 66% by 2026, fueled by AI, cloud computing, and 5G adoption. This growth is attracting significant investments, with Navi Mumbai emerging as a key data center hub. The expansion is expected to create jobs, bolster digital infrastructure, and position India as a global technology leader.India's data centres are all set for exponential growth driven by the increasing integration of artificial intelligence (AI) across industries, the widespread adoption of cloud storage solutions by businesses and individuals, and the accelerated nationwide rollout of 5G technology. This convergence of transformative technologies is driving unprecedented demand for robust, scalable, and secure data infrastructure to support India's rapidly evolving digital ecosystem. In the backdrop of rising demand, these assets are emerging as the most attractive growth opportunity for global institutional investors and leading developers. The combination of these factors is expected to fuel the boom pushing the data centre capacity in the country up 66% over the next two years by 2026, attracting investments worth around $4 billion and adding assets spread over 7.3 million sq ft, showed data from JLL India. "India is rapidly establishing itself as a global centre for AI innovation and data centre growth. The DC industry is expected to add a staggering 604 MW capacity in the next two and a half years (H2 2024-2026). The push for AI-ready infrastructure, combined with the transformative influence of 5G, is revolutionizing India's digital ecosystem and positioning the country as a leader in technological advancements," said Rachit Mohan, APAC Lead - Data Centre Leasing, JLL. Navi Mumbai, according to him, is emerging as a key data centre location, with potential demand expected to reach 800 MW in next few years. "As digitization continues to grow in India, data centers are becoming increasingly essential for various sectors such as cloud computing, digital payments & services, e-commerce and emerging technology like AI. India is a key market for us, playing a central role in our ambitious growth strategy and supporting our expansion plans," Pratap Mane, President & Country Head - India at Colt DCS, told ET. Earlier this week, COLT DCS, a hyperscale and large enterprise data center operator, entered an alliance with RMZ to cater to the increasing demand for data centres and launch a platform to develop digital infrastructure in the Indian market, with an investment of $1.7 billion. Global data center operator Princeton Digital Group has also entered a strategic partnership with K Raheja Corp-backed Mindspace Business Parks REIT to develop the formers' largest data center campus in India, at Mindspace Airoli West. India has witnessed investments flooding into the data centre markets over the last two years, with multiple primary markets created simultaneously, along with the rapid development of campus sizes found in the most established global cities. "Among the key markets, the Mumbai region is expected to maintain its market leadership, while we anticipate significant growth in Chennai and other regions. This expansion is not only driving demand for specialized skills but also creating opportunities across backward-linked industries," said Samantak Das, Chief Economist, JLL India. According to him, the DC industry is expected to add a staggering 604 MW capacity in the next two and a half years and the growth is a testament to India's emergence as a global hub for AI innovation and data centre development. Additional factors such as the submarine cable infrastructure linking Mumbai and Chennai to Singapore, South East Asia, Europe, and the Middle East will help position India as a more attractive Asia Pacific location for data centre development, expansion, and investment in the years to come. The growth in data centers is expected to drive innovation, create jobs, and strengthen digital infrastructure, positioning India as a global technology leader and propelling its economic and technological advancement.

Fuelled by AI boom, India's Data Centre capacity to surge 66% by 2026, requiring 7.3 million sq. ft and USD 3.8 billion Investment: JLL

The industry is set to add 604 MW of capacity between H2 2024 and 2026, bringing the total from 917 MW to 1,521 MW.Mumbai is expected to maintain its market leadership, while Chennai and other regions are anticipated to see significant growth.The sector has expanded 2.5 times over the last four and half years, growing at a 24% CAGR.The Indian government has approved a USD 1.24 billion (INR 10,732 crores) investment in AI infrastructure, further fuelling the data centre growth.5G network coverage is estimated to have reached over 90% of India's population by the end of 2023.Navi Mumbai is emerging as a key data centre hub, with potential demand reaching 800 MW. India's Data Centre (DC) Industry is all set for exponential growth, driven primarily by artificial intelligence (AI) and the nationwide rollout of 5G technology. According to JLL India, the DC industry is expected to add a staggering 604 MW capacity in the next two and a half years (H2 2024-2026). The growth is a testament to India's emergence as a global hub for AI innovation and data centre development. "India is rapidly establishing itself as a global centre for AI innovation and data centre growth. Hyperscalers are increasingly pursuing self-build projects in major data centre hubs, while operators are planning new campuses powered by 400 kVA lines to support AI clusters. Navi Mumbai, a satellite city near Mumbai, is emerging as a key data centre location, with potential demand expected to reach 800 MW in next few years. The push for AI-ready infrastructure, combined with the transformative influence of 5G, is revolutionizing India's digital ecosystem and positioning the country as a leader in technological advancements," said Rachit Mohan, APAC Lead - Data Centre Leasing, JLL. In the first half of 2024 (January June), the DC industry already reached a capacity of 917 MW with an impressive 873 MW occupancy, indicating extremely tight market conditions. Over the past four and half years (2019-H1 2024), the sector has expanded 2.5 times, growing at a remarkable 24% CAGR. The growth is expected to be fuelled further by significant government initiatives, including the approval of a USD 1.24 billion investment in AI infrastructure. Additionally, 5G network coverage is estimated to have reached over 90% of India's population by the end of 2023. Dr. Samantak Das, Chief Economist and Head of Research & REIS, India, JLL said, " The future expansion of DC industry till 2026 will require approximately 7.3 million sq. ft of real estate and a capital investment of USD 3.8 billion. Mumbai is expected to maintain its market leadership, while we anticipate significant growth in Chennai and other regions. This expansion is not only driving demand for specialized skills but also creating opportunities across backward-linked industries. " As India positions itself at the forefront of technological advancement, the data centre industry's growth is set to have far-reaching implications for the country's digital infrastructure and economy. The industry's expansion is not only creating new job opportunities but also driving innovation across various sectors, solidifying India's position as a global tech powerhouse. - ends - About JLL For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage, and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.8 billion and operations in over 80 countries around the world, our more than 111,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com. About JLL India s JLL is India's premier and largest professional services firm specialising in real estate. The Firm has grown from strength to strength in India for the past two decades. JLL India has an extensive presence across 10 major cities (Mumbai, Delhi NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata, Ahmedabad, Kochi, and Coimbatore) and over 130 tier-II and III markets with a cumulative strength of over 15,000 professionals. The Firm provides investors, developers, local corporates, and multinational companies with a comprehensive range of services. These include leasing, capital markets, research & advisory, transaction management, project development, facility management and property & asset management. These services cover various asset classes such as commercial, industrial, warehouse and logistics, data centres, residential, retail, hospitality, healthcare, senior living, and education. For further information, please visit jll.co.in