Data centre industry to see USD 5 billion investment by 2025 on data localisation, higher digitisation

The research note said there was a 38 percent growth in data consumption in the April-June period, and the consumption will continue to grow at a compounded rate of 25-30 percent per year in the next few years, it said.

The consumption growth will be driven by factors such as high growth in e-commerce, an increase in social media usage, greater preference for over the top (OTT) platforms, the government's impetus to the Digital India initiative, and rapid digitalization of services across industries, it said.

Data localization norms initiated by the government and regulators, which mandate storage of sensitive data within India, will also support the development of local data centers, it said.

Citing industry lobby Nasscom's report said over three-fourth of the total IT infrastructure spends were concentrated towards captive and co-location based operating model as of FY2020.

However, the share of infrastructure-as-a-service (IaaS) in IT infrastructure spends is forecast to increase to more than 40 percent, it said, adding shift towards IaaS will continue as rapid adoption of Industry 4.0-led revolution leads to exponential growth in data volume and increases the need for scalability of resources.

As the adoption of cloud services increases, data center demand will transition from captive to co-location and IaaS-based offerings, it said. The data center industry has been largely concentrated in the top four cities, with Mumbai, Delhi, Bengaluru, and Chennai accounting for 60 percent of total data center sites and more than 75 percent in IT load capacities, it said.

However, the share of these cities will decline marginally in the next five years as lack of space and higher rental costs, and improved infrastructure availability in next rung cities leads to some larger hyper-scale data centers being set up in those cities, it said.