India has the potential to become global data centre hub owing to low cost of construction, low cost of land and power compared to other countries as the country is already having a well-established IT and digitally enabled services ecosystem.

According to Cushman & Wakefield, the median cost of constructing a data centre in India is estimated at USD 6.8 million per MW of capacity, significantly lower than most APAC nations – Australia is at 9.17 million, Japan is at 12.73, Singapore is at 11.23 and China is at 6.84.

According to the data, India’s data centre capacity stood at 977 MW across the top 7 cities. India’s current under-construction capacity addition stands at 1.03 GW for 2024-2028, with an additional 1.29 GW being planned, taking the total projected capacity to 3.29 GW by 2028.

“But whatever we are building is barely allowing us to catch up with a lot of other mature market, so there is potential to keep investing and keep growing more. We should give data Center operators, developers and investors more confidence in the India story and the potential for such development,” said Vivek Dahiya, Managing Director & Head Data Centre Advisory Team, Asia Pacific.

Cushman & Wakefield report said that despite a strong pipeline projection of 3.29 GW of Colocation (Colo) data centre capacity by 2028, India will require an additional data centre capacity of 1.7 – 3.6 Gigawatt (GW). This is over and above the planned development of 2.32 GW.

The company said that at over 19GB, Indians have been the highest consumers of data per month among comparable nations. Despite this, India today lags in internet and smartphone penetration, reflecting the scale and extent that the data centre segment is headed towards.

“India is poised for a data centre revolution and possesses all the necessary elements to become a major global hub. While much attention has been given to supply, our analysis focuses on the demand side of the equation,” said Gautam Saraf, Managing Director, Mumbai, and New Business at Cushman & Wakefield.

More than 90% of this supply concentrated in key markets including Mumbai (which is a clear leader), Chennai, Delhi NCR and Hyderabad – which is fast emerging as the new data centre hub in India.

However some small data centers are also coming in tier 2 cities. Experts said that considering the increasing demand for Artificial Intelligence (AI) that is expected, it will further augment overall demand of DCs in India.

“We have not taken the demand generated by AI but we believe it will double the demand. We will have more clarity in the next few years,” said Dahiya.

India is among the few nations aiming to double its power generation capacity to 820 GW by 2030, a move that will benefit power-consuming industries like data centres. The availability of ample power supply is a key criterion for the data centre industry, which is also sensitive to the quality of the power supply.

Additionally, of the 820 GW expected by 2030, a dominant 61% is likely expected from renewable sources, emphasising India’s high focus on sustainability.

Dahiya said that there will be demand for more and more capital and Indian banks are now more open to provide debt for data centre transaction and it is the beginning of Indian financial institutions understanding this asset class.