AI boom likely to trigger $3.8 billion flow into India's data centre industry: Report

India's Data Centre Industry is poised to surge 66 per cent by 2026, driven primarily by artificial intelligence (AI) and the nationwide rollout of 5G technology, according to real estate advisory firm JLL India.

The country's Data Centre industry is expected to add a staggering 604 MW capacity, requiring 7.3 million square feet and $3.8 billion in the next two and a half years (H2 2024-2026), the JLL report states.

It highlights that 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.

The growth is expected to be fuelled further by significant government initiatives, including the approval of a $1.24 billion investment in AI infrastructure. Additionally, 5G network coverage is estimated to have reached over 90 per cent of India's population by the end of 2023.

In the first half of 2024 (January to June), the Data Centre 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 per cent CAGR (compound annual growth rate).

“Navi Mumbai, a satellite city near Mumbai, is emerging as a key data centre location, with potential demand expected to reach 800 MW in the 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.

Samantak Das, chief economist at JLL India, said, "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, the report added.