Why Is India’s Data Centre Capacity Set To Double By 2028 As Per ICRA?
India’s technology ecosystem is rapidly scaling, and according to ICRA, the country’s third-party data centre capacity is expected to double by March 2028. This projection reflects the growing demand for digital infrastructure, driven by cloud adoption, enterprise IT outsourcing, and the government’s push for digital transformation. But what does this mean for investors and businesses that rely heavily on data services? Let’s break it down.
About ICRA and Its Industry Outlook
ICRA, one of India’s leading credit rating and research agencies, regularly publishes industry insights on sectors that influence economic growth. Its latest report on data centres suggests that India’s role in the global digital economy will expand significantly in the next three years. This is driven not just by demand but also by government incentives, digital adoption by enterprises, and the increasing need for localized data storage under regulatory frameworks.
• Cloud and SaaS adoption across industries
• Digitalisation of BFSI, e-commerce, and healthcare
• Favourable government policies including PLI schemes
• Rising data consumption per user in India
Cloud Adoption and Enterprise Demand
The exponential growth of cloud computing is the backbone of data centre expansion. As businesses shift from legacy systems to cloud-based platforms, they require scalable and secure infrastructure. The Indian market, with its large enterprise base and booming startup ecosystem, is witnessing accelerated migration to cloud services. ICRA highlights that this shift will lead to higher demand for third-party data centres rather than captive facilities, as companies prefer OPEX models over CAPEX-heavy investments.
• BFSI – digital banking, UPI transactions, and fintech integrations
• Retail & E-commerce – data-heavy personalized shopping
• Healthcare – electronic medical records & telemedicine
• Media & Entertainment – OTT platforms requiring high bandwidth
Government Push and Regulatory Landscape
India’s government has been vocal about creating a robust digital economy. Policies around data localization, incentives for building infrastructure, and improved power supply frameworks are expected to act as catalysts. In addition, the rising focus on AI, cybersecurity, and 5G adoption ensures that demand for storage and processing will multiply.
• Land and power subsidies for data centre operators
• Incentives under Digital India and PLI schemes
• Compliance-driven localization demand from global players
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Challenges to Watch Out For
While the growth outlook is strong, ICRA also flags key challenges. Land acquisition, high power costs, and lengthy approval processes can delay project execution. Moreover, intense competition among global and domestic players may lead to margin pressures. Another factor is sustainability, as investors increasingly demand ESG compliance in data-heavy industries.
• Power dependency – high operational costs
• Long approval timelines for infra development
• ESG compliance costs
• Competitive pricing pressures
Investor Takeaway
ICRA’s forecast of India doubling its data centre capacity by March 2028 reflects a high-growth opportunity for investors in digital infrastructure, cloud service providers, and related sectors. While risks around power, land, and ESG compliance exist, the strong policy push and enterprise adoption story remain compelling. For investors, it will be crucial to monitor which listed companies and REITs capture market share in this sector. You can continue to explore similar forward-looking insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
