India experienced a 21 percent growth in data centre absorption in the first half of this year, rising from 778 megawatts (MW) in H1 2023 to nearly 942 MW in H1 2024, as the demand for edge data centres surged in tier 2 and 3 cities.

According to Savills India, a global real estate advisory firm, approximately 71 MW of IT capacity was added across key data centre micro-markets from January to June. Concurrently, the market witnessed transactions of around 200 MW in IT capacity during this period. By the end of 2024, the market is projected to grow to approximately 400 MW in IT capacity.

The demand was driven by hyper scalers, the banking, financial services, and insurance (BFSI) sector, IT and ITeS, and service sectors, all heavily reliant on data centre operators for colocation and related services, the report noted.

"We project a strong demand for data centre capacity in India by the end of 2024, with an estimated requirement of 400 MW across major cities", said Srihari Srinivasan, Director and Lead Data Centre Services, Savills India.

While supply is expected to reach 350 MW during the same period, data centre operators are expanding their service offerings beyond colocation to include networking, cloud solutions, specialised hardware like GPUs, and other managed services.

Mumbai led the data centre market with a substantial 54.9 percent share of the total capacity, followed by Chennai (12.3 percent), Bengaluru (8.2 percent), and Pune (7.2 percent).

Hyperscalers accounted for 22 percent of the total stock, while enterprises held 10 percent. The remaining 68 per cent was utilised by a combination of hyper scalers and enterprises, showcasing a diverse utilisation pattern within the data centre industry.

“This growth is being driven by surging internet usage, the rise of 5G, and the need for ultra-low latency for mobile devices, which is also creating a growing demand for edge data centres in specific areas”, added Srinivasan.