India’s $30bn datacentre gold rush

• Datacentre investment activity is picking up in India
• Investment bank calculates that $30bn of investment will be needed over the next five years
• Reliance Jio’s parent company, RIL, and Bharti Airtel are set to play a major role in the country’s datacentre developments 

The $30bn datacentre gold rush that is already convulsing India’s huge IT and telecom sectors is intensifying, as a report by investment bank Jefferies forecasts that capacity demand across the sub-continent is expected to quintuple to 8 GW (gigawatts) by 2030. 

However, it looks as though the lion’s (or should that be tiger’s) share of the market will go to the established players, such as AdaniConnex (a joint venture of Adani Enterprises and datacentre specialist EdgeConneX founded in 2021), Bharti Airtel and Reliance Industries Ltd (RIL) – the parent company of the country’s leading mobile operator, Reliance Jio – rather than to upstart competitors, mainly because of the massive capital outlay required to build the enormous new power-hungry AI data facilities. 

And Bharti Airtel and RIL are now new to the game. Through its Nxtra unit, Bharti Airtel is already operating and developing datacentre facilities in Noida, Pune, Mumbai, Kolkata, Hyderabad, Bengaluru, Chennai and Manesar. RIL, meanwhile, is a stakeholder in datacentre operator Digital Connexion, a three-way joint venture with Brookfield Asset Management and Digital Realty that already has datacentre facilities up and running in Mumbai and Chennai.  

As the Financial Express reports, the Jefferies team calculates that, in India, it costs $4m to $5m of investment to set up just 1 megawatt (MW) of datacentre capacity. Given the projected explosive growth, it is evident that the investment money needed will be gargantuan. 

The nation’s current datacentre capacity is 1.7 gigawatts (GW) and it will need at least 6.4 GW more if it is to meet forecast demand, additional capacity that would cost $30bn to deploy, according to the Jefferies team’s calculations. 

It’s possible, though, that the Jefferies projection may be underestimating the total investment required if recent announcements are anything to go by: Google Cloud, with help from Bharti Airtel, recently announced plans to develop a 1 GW AI datacentre in Visakhapatnam on the east coast of the Indian state of Andhra Pradesh that will be deployed over the next five years (2026-30) at a cost of $15bn. 

Meanwhile, RIL has teamed up with Nvidia for the development of AI factories and a large datacentre that Reliance is building in the western state of Gujarat which, according to reports, is a mammoth 3 gigawatt facility in Jamnagar that will cost up to $30bn to build and will be powered (in part, at least) by solar, wind and hydrogen energy from RIL’s New Energy division, Bloomberg has reported. 

Those Jamnagar numbers haven’t been confirmed and the total investment numbers for that facility and the Visakhapatnam datacentre cover a broad range of costs beyond the compute and storage platforms, but these examples show just how much capital is being pumped into India’s datacentre infrastructure.  

The Jefferies report further calculates that India’s datacentre services market is currently worth around $1.7bn but that “could rise to $8bn by 2030”. Jefferies also believes that, between them, “Bharti Airtel, Reliance and Adani Enterprises together may account for 35% to 40% of India’s total datacentre capacity by 2030.” 

Another report, India’s Data Center Paradox: The Digital Gold Rush that Can’t Be Ignored, published a month ago by the Mumbai, India-based Kotak Mutual Fund, emphases that AI workloads use three to five times the computing power of “traditional” datacentres. AI workloads already consume 15% of India’s datacentre capacity and this is projected to rise to 35% by 2027. 

The Kotak Mutual Fund also points out that India, which has more than 850 million internet users (mainly via mobile connections), now accounts for 20% of global data demand and the sub-continent’s mobile data consumption is among the highest in the world. Average usage per smartphone is projected to grow from about 25 to 30 gigabytes per month currently to 30 to 35 gigabytes per month by 2030. 

Furthermore, India has one of the lowest datacentre setup costs on the planet and, hitherto at least, electricity costs have also been advantageous at 20% to 30% below those of the US. However, the paradox, as headlined in the Kotak report, is that a mere 3% of data processed in Indian datacentres is stored in India, even though the nation accounts for 20% of global mobile data consumption. That’s why India’s nascent data localisation regulations, in tandem with the provisions of the 2023 Digital Personal Data Protection Act, are designed to ensure that companies will, increasingly, store data within the country. 

The India government and individual states are also offering incentives, including discounted electricity prices, tax breaks and fast-track planning approvals for the construction of datacentres, regardless of their size or location.

– Martyn Warwick, Editor in Chief, TelecomTV