New Delhi, March 25 (NationPress) India's data center capacity is anticipated to expand to approximately 4 gigawatts (GW) by FY30, presenting a potential investment opportunity of Rs. 1.5 lakh crore during this period, according to a report released on Wednesday.

The analysis from CareEdge Ratings highlights that India's data center capacity per million internet users stands at 1.2 megawatts, significantly trailing behind the global average of 5 megawatts per million users.

Factors such as digitization, cost efficiency, and the increasing adoption of artificial intelligence are propelling robust growth in the Indian data center industry. By 2025, India's share in the global data center market is projected to reach approximately 4 percent with a capacity of 1.2 gigawatts.

The nation's co-location data center capacity has experienced a doubling effect, reaching 1.2 gigawatts between FY22 and FY25, bolstered by impressive absorption rates, with utilization surpassing 90 percent on average, as per the report.

CareEdge Ratings predicts that industry revenue will increase at a compound annual growth rate (CAGR) of around 24 percent from FY26 to FY30, maintaining stable EBITDA margins of approximately 40–42 percent. However, leverage levels might remain relatively high due to an extensive capital expenditure cycle during the development phase.

The sector benefits from strong revenue visibility through long-term contracts, ensuring stable cash flows and fostering high customer loyalty.

“The industry is experiencing an upturn characterized by substantial capital expenditures, the fundraising capabilities of robust sponsors, and significant equity investments directed toward Indian data center enterprises,” stated Puja Jalan, Director at CareEdge Ratings.

The demand driven by AI is expected to accelerate the growth trajectory, while robust power infrastructure support will be crucial to unlock the industry’s full potential, she added.

Furthermore, the ability to manage cash flows amidst rising costs and extended commissioning timelines will be vital for sustainability, Jalan emphasized.

Notably, data center costs have surged by 50-70 percent in recent years due to escalating land prices, the adoption of advanced cooling technologies, and investments in renewable energy. Additionally, commissioning timelines have been prolonged due to changes in project scope and delays in obtaining necessary clearances, as indicated in the report.

Tej Kiran, Associate Director at CareEdge Ratings, observed that while current demand for data centers is primarily driven by enterprise IT and cloud storage, AI-driven workloads are poised to fuel the next growth phase over the next 5–7 years.