A Crisil Ratings report on Tuesday projected that revenue for India’s data centre operators could reach nearly Rs 20,000 crore per year by FY28, reflecting strong annual growth of 20–22% as both businesses and consumers increasingly adopt digital technologies and platforms. To keep up with rising demand, industry capacity is expected to double, reaching 2.3–2.5 gigawatts (GW) by March 2028. While capital expenditure is set to rise sharply, requiring significant debt, Crisil anticipates that operators’ credit profiles will remain stable, supported by steady cash flows from existing facilities, helping maintain manageable leverage metrics such as EBITDA.

The report, which assessed operators representing 75–80% of India’s current data centre capacity, identified three main drivers of sector growth: widespread adoption of public cloud services amid enterprise digital transformation, increased investment in artificial intelligence (AI) necessitating high-density computing infrastructure, and the expansion of 5G networks, which is driving demand for low-latency applications such as video streaming, gaming, and IoT, boosting the need for edge-proximate data centres.

Crisil also highlighted strong customer retention in the sector, thanks to high switching costs and long-term contracts, particularly with hyperscalers, who now account for more than half of all capacity commitments, providing predictable cash flows. However, the report cautioned that the significant bargaining power of hyperscalers and their potential shift toward captive data centres could heighten competition and pressure pricing for third-party operators. Although contract pricing has been largely stable over the past two years, it remains a key factor to monitor. Moving forward, sector performance will depend on operators’ ability to bring new capacity online on time and secure customer commitments at sustainable pricing.