Jefferies upbeat about India data centre story, sees capacity expanding 5x in 5 years: Who will benefit?

Betting big on India’s data centre capacity, foreign brokerage Jefferies has estimated the country’s footprint in this area to expand significantly over the next five years. According to the brokerage, the country’s data centre capacity is expected to grow by five times to 8 gigawatts (GW) by 2030. 

The brokerage has projected capital expenditure (capex) to the tune of $30 billion during this period, with leasing revenues also estimated to jump five times to $ 8 billion. 

Key beneficiaries of India’s data centre capacity expansion in 5 years

Jefferies expects Bharti Airtel, Reliance and ADE to form 35-40 per cent of the domestic data centre capacity, with players across areas such as infrastructure, power and cooling solutions also expected to be key beneficiaries of this surge. 

This growth trajectory points to a structural demand shift driven by Cloud adoption, Artificial Intelligence-led workloads, rising Internet penetration, and the Centre’s digitalisation push.

India’s Data Centre Story | Economic Survey expects capacity to expand to $11.6 billion by 2032

The brokerage’s estimates follow a projected expansion from $4.5 billion in 2023 to $11.6 billion by 2032, in the Economic Survey earlier this year, as the country’s data centre market experiences substantial growth. That indicates a CAGR of almost 11 per cent. 

In the official document, economists have highlighted factors such as infrastructure expansion and increasing digital service demand behind the projected robust growth in this area. 

According to the Economic Survey, the country’s colocation data centre capacity reached 977 MW in 2023, with an additional capacity of 258 MW leading to 105 per cent growth on a year-on-year basis.

The total data centre capacity under construction for the years 2024-2028 is estimated 1.03 GW, with a additional 1.29 GW planned, according to the survey.

The Economic Survey is an annual report presented by the government on the eve of the presentation of the Union Budget in Parliament.

It is prepared by the Economic Division within the Department of Economic Affairs, part of the Ministry of Finance, under the guidance of the Chief Economic Advisor.

ALSO READ: Indian data centre market expected to grow to $11.6 billion by 2032, says Economic Survey 

Data centre pending seen increasing over 19% this year

According to a forecast by research and advisory firm Gartner, the expenditure on data centre systems in the country is expected to increase 19.1 per cent in 2025, marking nearly double the growth rate recorded the previous year.

The firm expects software and IT services to be major drivers of IT spending growth in the country, rising 16.9 per cent and 11.2 per cent during the year, respectively.

ALSO READ: Spending on domestic data centre systems seen increasing over 19%

What are data centres and why is it important for economies like India to raise their capacities in this area?

Data centres are specialised facilities housing digital hardware including computer servers, storage systems and networking equipment to store, process and distribute digital data.

These facilities form the very backbone for major web applications, ranging from Cloud platforms to banking to e-commerce to social media and communications services.

Simply put, they enable businesses to manage and store massive volumes of data safely and efficiently, providing critical backup, disaster recovery, and uptime for digital services.

It is crucial for the economy to expand its footprint in this area given its growing digital economy and data generation.