Expansion of Indian data centers expected to invest up to 1.2 lakh cr in next five years: Report

Credit rating agency ICRA on Tuesday said capacity expansion of data centers in India by both foreign and local firms is expected to entail investments of Rs 1.05 lakh to Rs 1.2 lakh crore over a period of next five years.

The Indian data center market is witnessing a healthy growth primarily driven by large hyper-scalers: Amazon Web Services, Google, Microsoft, Facebook, ibm, Uber, dropbox etc. who are outsourcing their storage needs to third party data center providers, ICRA said.

Indian corporates like Hiranandani Group, Adani Group, foreign investors including Amazon, EdgeConnex, Microsoft, CapitaLand, Mantra Group have started investing in Indian data centers.

“Along with them, existing companies like NTT, CtrlS, Nxtra, STT India are also expanding their capacities. Overall, 3900-4100 MW capacity involving an investment of Rs 1.05 – 1.20 lakh crore, to be added in the next five years. There is a possibility of this,” ICRA said.

The industry’s revenue is expected to grow at a compound annual growth rate (CAGR) of around 18-19 per cent during FY 2022-2024, driven by a 24 per cent CAGR growth between FY 2018-2021 and ramp up in rack capacity utilization. supported by growth. Construction of new data centers.

With increased revenues and better absorption of fixed costs, operating margins for data center companies are expected to improve and remain in the 40-42 per cent range.

Favorable regulatory support, fast-growing cloud computing, increasing Internet penetration, government efforts on the digital economy, adoption of new technologies (IoT, 5G etc.), increasing need for hyper-scalers are some of the key factors driving the demand for data centers. in the country. The capacity in this sector is likely to increase five-fold in the next five years,” said Rajeshwar Burla, Head of Corporate Ratings Group, ICRA.

In addition, the government has accorded infrastructure status to data centers in the Union Budget 2022-23, which will enable players to access foreign funds through long-term loans and external commercial borrowing route at competitive rates, he said. said.

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