1Lattice, a leading tech-enabled market intelligence firm, has launched a new report on the future of data centers in India. The report projects that India’s data center market, valued at US$ 7B in 2023, is expected to grow at a compound annual growth rate (CAGR) of 8%, reaching US$ 8B by 2025. Additionally, the country’s data center capacity is set to expand from 1,150 MW in 2023 to 1,700 MW by 2025, with a robust growth rate of 22%.
The report highlights the key trends and drivers behind this growth, including increased mobile data consumption, the rise of Industry 4.0 technologies, and the rapid adoption of 5G and IoT solutions. It also emphasizes the critical role of government initiatives like the Data Center Incentivization Scheme and Make in India in boosting the data center sector. With a growing number of data centers concentrated in Mumbai, Delhi NCR, and Bengaluru, the report outlines how these cities have become central hubs for colocation services, accounting for over 55% of the country’s capacity
“India is at a pivotal moment in its digital transformation journey. The surge in data consumption, the rise of emerging technologies, and strong government support are converging to make India one of the fastest-growing data center markets in the world. Our report reflects not only the growth but also the strategic shifts necessary to sustain this momentum. Investments in infrastructure, technology, and sustainability will be key drivers of this transformation,” said Abhishek Maiti, Director – Technology & Internet at 1Lattice.
Globally, the report notes that the data center market is expected to grow from US$ 227B in 2023 to US$ 250B by 2025. The expansion is driven by the global adoption of cloud computing, edge technologies, and AI/ML, reshaping how industries manage and store data.
The report also addresses the challenges faced by the sector, such as high setup costs, infrastructure limitations, and a shortage of skilled labor. However, government policies, including the Data Center Economic Zones scheme, are expected to mitigate these challenges by providing incentives and boosting investments in the sector.
The report provides a detailed analysis of the industry’s technological trend, including the integration of edge computing and AI, automation for operational efficiency, and sustainability measures. Data centers are increasingly adopting renewable energy and energy-efficient technologies to meet global climate goals, creating further opportunities for growth.
