Data centre. Representative image.
Credit: iStock Photo
Bengaluru: Indian data centres are projected to attract Rs 2-2.3 lakh crore in investments over the next 7-10 years, according to a webinar by investment information and credit rating agency ICRA Ltd.
These investments in the 3-3.5 GW development pipeline are to be delivered in the next 7-10 years by established data centre players and new ones that have entered the sector in the past 3-4 years.
In just the next two financial years (FY26 and FY27) Rs 40,000-45,000 crore is anticipated for DC capacity expansion.
With this investment India’s data centre operational capacity will increase to 2,000-2,100 MW by March 2027 from around 1,150 MW as of December 2024. This will be supported by internet usage and data localisation initiatives. AI also presents a new wave of demand for data centre capacity.
As competition is heating up with the entry of new players, pricing flexibility is getting increasingly constrained, which will exert a drag on the profitability and return metrics for the incremental business.
“Co-location services, backed by hyperscalers, contribute to the majority (80-85%) of data centre revenues for major developers. However, with the increase in the number of data centre developers in India (from 5 in 2019 to 18 in 2025), servicing the same set of hyperscalers has led to moderation in rentals in the recent past as negotiation power has tilted more towards them,” said Anupama Reddy, vice president and co-group head, Corporate Ratings, ICRA.
The sporadic rise in supply of data centres and the rising competition with put pressure of the margins of the developers in the medium term.
Still, the revenues for top five players (which account for around 75-80% of operational capacities in India) are projected to expand by 18-20% year-on-year in FY26.
Around 75 per cent of the upcoming capacities in the next three years are concentrated in Mumbai, Chennai and Hyderabad.