India’s data centre operators are projected to generate around Rs 20,000 crore in annual revenue by FY28, reflecting a compound annual growth rate of 20–22% between FY26 and FY28, ratings agency Crisil said in a recent report. The surge is being driven by rising enterprise cloud adoption, AI-led workloads and growing digital consumption among retail users, it added.
To keep pace, industry capacity is expected to more than double to 2.3–2.5 GW by March 2028, with 1.1–1.3 GW of incremental supply likely to come online over FY26–FY28. This expansion is underpinned by rapid migration to public cloud, increased investments in high-density AI infrastructure and the rollout of 5G, which is fuelling demand for low-latency applications such as streaming, gaming and internet-of-things services.
What did Anand Kulkarni say?
“The healthy revenue growth of 20–22% for data centre operators will emanate from robust industry capacity addition, which is expected to double by March 2028,” Anand Kulkarni, director, Crisil Ratings, said. He added that the incremental capacity is expected to achieve timely tie-ups backed by strong demand. India’s data centre density—at just ~65 MW per exabyte—remains among the lowest globally, a factor that will support utilisation levels of 90–95%, in line with the past three fiscals.
Crisil’s expectations
This growth phase will require a significant increase in capital spending. Crisil expects the industry to invest Rs 55,000–Rs 65,000 crore in capex over FY26–FY28—a cycle that will require sizeable debt but is likely to be supported by stable operating cash flows.
“While this would require sizeable debt funding, growing Ebitda from operational capacities will keep leverage steady at 4.6–4.7 times and support credit profiles,” Nitin Bansal, associate director, Crisil Ratings, said. Crisil also highlighted that timely project commissioning and securing customer tie-ups at adequate rates will be key to ensuring operators can smoothly navigate this three-year growth cycle.
Customer stickiness—supported by high switching costs and long-term contracts, particularly with hyperscalers—strengthens the credit outlook. Hyperscalers now account for more than half of all capacity tie-ups, providing stable and predictable cash flow visibility, the report noted. However, their scale also gives them substantial bargaining power, and the anticipated addition of captive hyperscaler facilities could exert pricing pressure on third-party operators over the medium term, it added.