Summary

The India Data Center Market size is expected to grow from USD 6.12 billion in 2023 to USD 10.89 billion by 2028, at a CAGR of 12.22% during the forecast period (2023-2028).

The rapid adoption of cloud-based business operations has encouraged businesses to acquire data management capacities to handle huge volumes of data that are being generated. Increased proliferation of online shopping due to the availability of user-friendly interfaces, high-speed internet, and smart devices such as smartphones, tablets, laptops, etc., is expected to drive the market in the future.

Key Highlights
India is among the APAC region's major players in the data center sector. Data centers are critical for national security, internet infrastructure, and economic output. In India, data center infrastructure is growing exponentially, with a growing preference for the Cloud and increased data consumption and generation by over half a billion digital users.
For companies that undertake the cloud migration process, the Cloud can have a huge impact. This includes reducing the total cost of ownership (TCO), quicker delivery, and better prospects for innovation. Agility and flexibility, two essential qualities to satisfy changing consumer and industry demands, come with access to the Cloud. The migration of businesses to the Cloud has increased recently as they shift into more flexible digital workplaces to deal with the increase in online demand and remote working. Although the Cloud is the foundation of digital transformation, cloud services are built on data centers. Due to this, the cloud migration of businesses is driving the growth of the data centers market in India.
India is becoming the global destination for setting up data centers. But it could also reinforce its position as a global hub for green data centers. Demand for new data centers is enormous in India, driven by the hyperscale facilities key internet players, such as Amazon Web Services (AWS), Microsoft, Google Cloud, and Alibaba Cloud, demand to power their clouds.
Datacenter establishment in India is cost-intensive, a barrier to entering the industry for many data center companies. Prevalent norms for commercial buildings applied to data centers lead to wastage of space and increased cost. Besides, factors such as high real estate costs, expenses on improving wide area network connectivity, and increased equipment costs have also augmented the heavy CapEx in the sector.
The COVID-19 pandemic led to a new wave of digital transformation in various sectors across the country. Businesses rapidly turn to third-party colocation facilities for data center operations, further complemented by an increased shift toward a hybrid IT approach that leverages the combined capabilities of hosted data centers and multi-cloud setups.

India Data Center Market Trends

Government Support in the Form of Tax Incentives for Development of Data Centers is Expected to Drive the Market Growth

The Government of India and various state governments are revising their data center policies to support the infrastructural growth of data centers in India through tax subsidies. Under a national policy framework for data centers, the IT ministry intends to provide up to INR 15,000 crore (USD 1.83 Million) as incentives. The government plans to invest up to Rs 3 lakh crore (USD 36.5 Million) in the data center ecosystem, over the next five years, as per the policy.
The Government of Maharashtra announced the GST refund for a maximum period of 10 years for the companies that participate in developing integrated facilities. Similarly, the Andhra Pradesh government announced providing 50% reimbursement of SGST on purchasing raw materials and equipment for three years from the approval date of the project.
Tamil Nadu government announced a data center policy that allows the data centers to avail of an Electricity TAX waiver. For five years following the start of commercial operation, there is a 100% electricity tax subsidy on power obtained from the Tamil Nadu Generation and Distribution Corporation Ltd. or generated and consumed using captive sources.
The Odisha government announced a data center policy that offers a 100% reimbursement of net SGST. Net SGST paid in will be fully reimbursed to eligible units, relying on its exports of goods and services for funding limited to 100% of fixed capital investment for a maximum of seven years.
In June 2022, the Haryana cabinet approved a data center policy to make Haryana a popular location for constructing these facilities and assist the state in becoming a hub for global data centers. The Haryana government would categorize the data center sector as an energy-intensive and infrastructure industry. The government would deem data centers essential by the Haryana Essential Services Maintenance Act of 1974. This policy includes various tax incentives, such as reimbursement of SGST and a land tax rebate.
As per NASSCOM, the Indian data center market would witness cumulative investments of USD 25 billion during 2019-2025. India's data center market investment is expected to reach USD 4.8 billion in 2025. Investment increase is expected from private equity players, real estate developers, and end occupiers.

Servers IT Infrastructure Type Segment is Expected to Holds Significant Market Share

In India's data center market, various IT infrastructures are deployed to support server operations. Rack servers are the most common type of servers used in data centers. These servers are mounted in standard racks, which provide easy installation and maintenance.
Virtualized servers use virtualization technology to run multiple virtual machines on a single physical server. This approach helps maximize resource utilization and improve efficiency in data centers.
Storage servers are specialized servers dedicated to storing and managing data. They provide high-capacity storage solutions for data-intensive applications and backup purposes.
Mainframe systems are high-performance servers designed for heavy workloads and large-scale data processing. They are commonly used in enterprise-level data centers.
With the growth of data-intensive technologies, cloud computing, and digital services, organizations are generating and processing larger volumes of data. Data centers need to scale their server infrastructure to accommodate these increasing workloads. This may involve adding more servers to existing data centers or constructing new data centers altogether.
The increasing number of data centers directly relates to the demand for server IT infrastructure. As the number of data centers grows, there is a corresponding need for more server infrastructure to support the expanding computing requirements. According to Cloudscene, as of January 2022, 138 data centers were in India.

India Data Center Industry Overview

The Indian Data Center Market is highly concentrated due to higher initial investments and low availability of resources. The major players, with a prominent share of the market, are focusing on expanding their customer base across foreign countries. These companies are leveraging strategic collaborative initiatives to increase their market share and increase their profitability. However, with technological advancements and product innovations, mid-size to smaller companies are increasing their market presence by securing new contracts and by tapping new markets.

In May 2022, a strategic partnership between Cyxtera, a collocation service provider, and SifyTechnologies Limited was signed, and it would enable it to start providing colocation solutions in India. Customers in five more markets in India can now use colocation services from Cyxtera.

In May 2022, Cisco Duo launched the data center in Mumbai. The data center would enable all functionality from Duo's zero-trust platform, including multi-factor authentication (MFA), single sign-on (SSO), VPN-less remote access, device trust, password-less (in public preview), and adaptive risk-based policies.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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