What Role Does Renewable Energy Play in the Indian Data Center Market?

Indian Data Center Market: Powering India's Digital Future with a Projected CAGR of 11.4% Through 2030

The Indian Data Center Market has entered a high-growth phase, driven by digital transformation, increasing internet penetration, and a growing need for secure and scalable storage infrastructure. Valued at USD 1.67 billion in 2023, the market is expected to surge to USD 3.56 billion by 2030, registering a CAGR of 11.4% during the forecast period. With India fast becoming a digital economy, data centers are emerging as the cornerstone of connectivity, storage, and data processing.

Indian Data Center Market Overview

A data center is a facility used by organizations to store, manage, and disseminate their data and applications. Modern data centers are equipped with an array of components, including routers, switches, firewalls, servers, storage systems, and application-delivery controllers, to ensure seamless operations. While traditional data centers were housed on-premises, the market has rapidly shifted to cloud-based infrastructure operated by third-party service providers to offer scalable solutions for multiple businesses.

In India, the data center landscape is rapidly evolving. Top-tier cities like Mumbai, Delhi, Bengaluru, and Chennai dominate the industry, accounting for ~60% of data center locations and over 75% of IT load capacities. This regional clustering is transforming India into a digital infrastructure powerhouse.

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Market Growth Drivers

1. Surge in Digitalization and Internet Users

India is currently home to over 880 million internet users, fueling exponential growth in data consumption. With rising smartphone usage, digitization of services, and cloud adoption, the demand for secure and efficient data centers is growing.

2. Government Support and Policy Push

Initiatives such as Digital India and the proposed Data Centre Policy 2020 are catalyzing infrastructure growth. Government efforts to promote data localization and digital services across public and private sectors are boosting the need for robust data infrastructure.

3. Expansion by Global Tech Giants

Major global and domestic players are making substantial investments. For instance, Digital Realty launched its first Indian data center in Chennai in January 2024, with a capacity of 100 MW. Similarly, Colt DCS and Vertiv are expanding their footprint with hyperscale, sustainable facilities.

4. Renewable and Sustainable Energy Integration

In line with global sustainability goals, several players are aligning with green energy mandates. Companies like Colt DCS and Vertiv are investing in IGBC-compliant parks and net-zero carbon initiatives, ensuring the industry’s growth is environmentally responsible.

Market Challenges

Despite the rapid pace of growth, the market faces hurdles:

Infrastructure Deficit: Current capacity is struggling to keep pace with rising data demands. India’s data center power consumption is projected to reach 5 gigawatts in the next 6–7 years, straining current infrastructure.

Environmental Pressures: The data center industry's expanding carbon footprint calls for urgent adoption of renewable energy and sustainable practices.

Emerging Market Opportunities

1. Real Estate Expansion

The data center sector has become a dedicated real estate sub-sector. Over 500 acres of land were acquired in 2022 for new facility construction. India’s data center space, which stood at 10.3 million sq. ft. in 2022, is expected to double to 20 million sq. ft. by 2025.

2. Domestic Manufacturing Push

The Data Centre Policy 2020 seeks to promote local manufacturing of IT and non-IT equipment. This initiative supports Make in India, reduces import dependency, and fosters innovation in indigenous infrastructure components.

3. Renewable Energy Integration

Data centers are poised to become major adopters of clean and captive power sources, creating opportunities for renewable energy developers and tech solution providers across the energy storage and transmission value chain.

Segment Analysis

By Industry Vertical

IT & Telecom emerged as the dominant sector in 2023, expected to maintain the largest market share. These facilities handle enormous volumes of data traffic, requiring high-bandwidth, low-latency environments to support services like cloud computing, mobile connectivity, and OTT platforms.

By Component

The Electrical segment led the market in 2023 and is expected to retain its dominance. Power supply systems, energy backup, and management solutions are essential to ensure uninterrupted operations in a 24x7 industry.

Key Regional Trends

Mumbai continues to lead the Indian data center capacity with a 50% market share, followed by Chennai (14%). Mumbai is now ranked the third-largest data center hub in Asia-Pacific, underlining India’s global relevance.

Tier-2 cities are also beginning to see increased activity, as companies look to expand closer to end-users and reduce latency.

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Competitive Landscape

India’s data center market is highly competitive, with a mix of domestic and global players. Leading companies include:

Sify Technologies

Web Werks

CtrlS Datacenters Ltd

AWS

Yotta

Netmagic Solutions

Nxtra Data (Bharti Airtel)

Reliance

STT GDC

Tata Communications

Equinix

AdaniConneX

Vertiv

COLT DCS

These companies are investing in hyperscale facilities, AI-ready infrastructure, and energy-efficient solutions to meet future demand and maintain market leadership.

Conclusion

The Indian Data Center Market is well on its way to becoming a critical pillar of the country’s digital economy. With a growing population of tech-savvy users, supportive government initiatives, and strong investments from both domestic and international players, the market is poised for sustained double-digit growth through 2030. However, addressing infrastructural gaps and embracing renewable energy will be crucial for long-term resilience and sustainability.

As India inches toward becoming a global digital hub, its data center market is not just expanding — it’s transforming the very backbone of modern digital infrastructure.