Hyderabad leads emergence of India’s new data centre hubs

By end-2030, Hyderabad and other emerging hubs are expected to see a six-fold rise in data centre capacity to 1.1 gigawatts (GW), implying an annualized growth of 58%.

Mumbai: New data centre hubs such as Hyderabad are gaining ground in India, with established markets such as Chennai and Bengaluru expected to lose market share as newer regions add capacity by 2030.

According to real estate services firm Cushman & Wakefield’s 16 September report, Hyderabad and “other emerging markets” accounted for 10%, or 178 megawatts (MW), of India’s operational data centre capacity as of 30 June. This is expected to rise nearly six-fold to 1.1 gigawatts (GW) by end-2030, accounting for 20% of the projected 5.65GW operational capacity and implying annualized growth of 58%.

Chennai, India’s second-largest region for data centres, is projected to lose some of its market share and grow at a slower pace. It accounts for 12% or 215MW of active data centre capacity, per the report. This is expected to rise to 582MW by end-2030, an annualized growth rate of 28%

The shift comes as Indian states race to add capacity amid a data centre boom driven by artificial intelligence, cloud adoption and data-localization requirements. Conglomerates, standalone operators and big tech firms such as Google, Amazon and Microsoft have announced more than $250 billion of investments in India over the past 12 months.

This has led to the emergence of new data centre hubs such as Dholera in Gujarat, and Visakhapatnam in Andhra Pradesh. While the report did not specify new regions, it mentioned that 232MW of new capacity will be added by these new regions in the next four years.

Visakhapatnam has seen a flurry of activity. Google, in partnership with Adani group and Bharti Airtel, has announced a 1GW data centre in the region, while Meta India is planning a 500MW facility with Sify Technologies Ltd.

"Hyderabad currently has greater momentum because of the scale of new capacity being planned. Large contiguous sites, prospective power availability and strong demand from hyperscalers and AI companies are supporting projects that are very large relative to Hyderabad's existing base," said Kashyap Kompella, analyst and founder of technology consultancy firm RPA2AI Research.

Vinish Bawa, partner at PwC, said Hyderabad benefits from a "strong technology and enterprise demand base, competitive operating economics and a growing hyperscaler ecosystem."

Government incentives have also supported the emergence of new hubs. On 1 February, the Centre announced a tax holiday until 2047 for foreign cloud operators to use Indian data centres.

Most states, too, have brought out policies incentivizing data centre development. In 2016, Telangana released its own data centre policy for the sector, thus boosting development. Industry stakeholders, however, said Visakhapatnam would remain an emerging market, even as Google’s planned $15 billion investment could accelerate its development.

The expansion of new hubs faces a key constraint: power infrastructure. On 3 August, Mint reported that a lack of availability of power infrastructure such as transmission lines, substations and transformers are hindering the ability for data centres to expand in newer regions, including outskirts of established hubs.

The data centre boom in India has also been a boon for electric generator manufacturers, Mint reported Friday. Firms such as Cummins India, Kirloskar Oil Engines and Sterling Green Power Solutions are eyeing data centres as a key revenue driver.