India’s data centre ambitions will have to go through Malaysia

24 Sep 2024 CW Team

According to a research note by S&P Global, India presently holds the highest leased data centre capacity among several emerging markets, ranging between 1-3 GW. The report suggests that India is well-positioned to become a significant player in the data centre industry over the coming years, though it may face tough competition from countries like Malaysia and Vietnam.

The note projects that over $100 billion will be invested in data centre facilities in the Asia-Pacific region within the next five years. This investment will be driven by increasing data demands, the growth of artificial intelligence (AI), cloud computing, and digitalisation. Emerging markets in the region are expected to experience faster capacity growth than established markets during this period.

The Indian government is reportedly considering subsidies for data centre development, aiming to leverage the AI boom and provide easier access to computing capacity for start-ups and research institutions. Computing power, an essential component for large AI systems, is costly and often inaccessible to smaller businesses, making government support crucial.

S&P Global’s note also points out that emerging markets in Asia-Pacific offer several advantages over developed markets, including lower costs for developing and operating data centres, significant data demand growth due to digitalisation and favourable demographics, and government backing for local data centre infrastructure as part of efforts to maintain data sovereignty.

While India currently leads in data centre capacity among emerging markets such as Indonesia, Malaysia, the Philippines, Thailand, and Vietnam, the report forecasts that Malaysia may see faster growth in the sector between 2023 and 2028. However, India's relatively less stringent data sovereignty regulations could provide it with a competitive edge over Malaysia.

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