Indian telecom giant Airtel is planning to double its data center business in less than three years, as the country’s internet usage and artificial intelligence technologies take off.
Ashish Arora, CEO of Airtel’s data center subsidiary Nxtra, told the Financial Times that it will invest $600 million to reach a capacity of about 400 megawatts by the end of 2027.
Nxtra aims to become India’s number one or second-largest data center operator in the next five to seven years.
India could become a regional data center hub
The data center sector in India has grown rapidly in recent years, with the entry of international cloud services such as Amazon AWS, Microsoft Azure and Google Cloud. The sector is expected to be worth $1.2 billion in revenue by 2024, growing at a rate of more than 20% per year.
Experts say that as a result of increased competition and the government's policy to keep data in the country, India could become the leading data center base in the region. At the same time, India has 375,000 IT specialists specializing in artificial intelligence, which is second only to the United States.
Energy demand could become a serious problem
But the rapid growth of data centers is putting serious pressure on energy systems. According to official forecasts, India's annual energy consumption should increase by 6.4% by 2030, but this figure has now reached 9%. The current planned energy projects may not be enough to meet this demand.
According to a report by Nomura, the share of data centers in the country's electricity consumption will increase from 0.5% to 3% by 2030. Energy expert Labanya Jena says that this figure does not fully reflect the reality.
Market Growth and Competition
By 2024, average monthly data usage in India is expected to reach 21.1 GB per capita, a doubling in the past five years. During this period, data center capacity in the country has also increased from 590 MW to 1.4 GW, and is expected to exceed 9 GW by 2030.
The entry of billionaire businessmen like Mukesh Ambani and Gautam Adani into the sector has further fueled the market. Adani Group, along with US-based EdgeConneX, will build 1 GW of data centers over the next 10 years.
Currently, Nxtra is one of the top three players in the market, along with Japan’s NTT and Singapore-based STT. But India still has a huge potential in terms of data center capacity — it has only 1 MW of power per million users, compared to 51 MW in the US and 4 MW in China.
Price advantage makes India attractive
In terms of price, India is one of the cheapest markets in the region — at $80 per kilowatt per month, compared to nearly $200 in Indonesia.
However, the weakness of the power infrastructure is a concern for Nxtra’s management. Arora said that most state grids are not ready for such an expansion and the financial health of state-owned power distribution companies is not good.
Arora concluded:
“India has the potential to build land, energy and technology. Therefore, India will soon become a technology hub serving the world.”
