According to the JM Financial report, the demand for data centres is clearly increasing, and India may become the region's preferred data hub.

According to the report, the demand for data centres is rising due to both structural and cyclical factors.

Among the structural tailwinds are artificial intelligence (AI), the government's desire for data localization, and a sizable internet user base that generates a wealth of data.

According to the report, India has a disproportionately small share of DCs—it produces 20 percent of the world's data but only 5.5 percent of its DC capacity. In the past, slower-than-anticipated capacity addition has worsened the demand-supply mismatch, which has led to a cyclical increase in DC capacity construction.

According to the report's bottom-up analysis, India's colocation (colo) data centre capacity is expected to reach 1.35GW in 2024, an increase of 38 percent year over year.

Nevertheless, at 14 petabyte/MW, the nation has one of the lowest DC densities in the world, according to the research.

By 2030, India will require 5GW of total capacity to reach 50 percent of China's DC density. The current announced under-construction + anticipated capacity of 3.3GW by 2028 is in line with this.

Over the next five years, this will equate to an additional capital expenditure of $20 billion at an average capex/MW of ₹465 million. According to the estimate, an extra $60 billion may be spent on cloud infrastructure (servers, etc.).

Although hyperscalers will spend the majority of the money on cloud infrastructure, we believe that the $20 billion in capital expenditures for DC capacity alone might result in the issuance of $10 billion in equity (assuming average D/E of global participants). However, speculations indicate that these will only meet domestic demand in India.

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An actual building used by businesses to store their vital data and applications is called a data centre. A network of computer and storage resources forms the foundation of its architecture, allowing the delivery of shared data and applications. Servers, storage systems, routers, switches, firewalls, and application-delivery controllers are the main elements of a data centre design.