India’s data centre capacity set to nearly quintuple amid $45bn investment boom

Jefferies predicts India’s colocation data centre capacity will expand nearly fivefold over the next five years to around 10GW, driven by surging digital activity and favourable policies, creating a $45bn investment opportunity across the sector.

Jefferies expects India’s colocation data centre capacity to expand almost five-fold over the next five years, reaching about 10GW, as the country draws roughly US$45bn in facility capital expenditure. The bank said the build-out could create a broader US$45bn investment opportunity across the sector, from operators to equipment suppliers and infrastructure firms.

The forecast rests on a rapid rise in digital activity. According to the report, India’s colocation capacity has already grown five-fold over the past five years to 2GW, helped by stronger internet use, e-commerce adoption, lower-latency demand and the digitisation of government and corporate records. That leaves the market still relatively early in its development, despite the speed of recent growth.

Jefferies said India is gaining ground as a regional data centre hub because of structural cost and policy advantages. Power and capital costs are estimated to be 25% to 40% lower than in competing markets, while cloud providers can benefit from a 20-year tax holiday. The report also pointed to data-localisation rules, including the Digital Personal Data Protection Act, as a factor encouraging companies to keep more data onshore.

Demand is concentrated among hyperscalers, which the report said account for about 60% of the market, followed by banking, financial services and insurance at roughly 15%. With utilisation already at 95% to 97%, the industry will need substantial new capacity to keep pace. Jefferies said that should support not only data centre operators, but also construction groups, property developers, power equipment suppliers, cooling specialists and network infrastructure companies.