Morgan Stanley sees India data center growth potential

Investing.com -- Morgan Stanley hosted a panel discussion on India's data center industry with executives from Mindspace REIT, CapitaLand India Trust, and Invest India.

India's data center industry currently has about 1.4GW of capacity, which equals roughly 1W per capita. This compares to approximately 30W per capita in China and 100W per capita in the United States.

The panel identified infrastructure as the main constraint for growth rather than demand. Key infrastructure challenges include power availability, grid stability, cooling systems, and semiconductor supply chains.

Hyperscaler demand is expected to remain strong, with activity focused on Navi Mumbai, Chennai, and Hyderabad. Data centers offer development yields of around 15% compared to 10% for office properties. The panel noted that pricing power remains limited and returns will depend on execution quality and contract structures.

The panel expressed a positive view on artificial intelligence, expecting it to drive productivity rather than eliminate jobs. This outlook supports continued growth for Global Capability Centers in India, which benefit from a 60-70% cost advantage, a large talent pool, and favorable demographics.

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