Chennai’s Digital Transformation: The Rise of Data Centres on the Coast
Chennai is rapidly emerging as a significant data centre hub in India, driven by a combination of strategic advantages, government support, and increasing demand for digital infrastructure. As the digital landscape evolves, Chennai stands out among Indian cities, positioning itself as a key player in the global data centre market.
Strategic location and connectivity
Chennai’s geographical advantage is one of its strongest assets. Located on the southeastern coast of India, it provides excellent connectivity to international markets through undersea cable networks.
The city is home to four major undersea cable landing stations, which facilitate high-speed internet connectivity and make it an attractive location for data centres serving the Asia-Pacific region. This connectivity is crucial as global data traffic continues to surge, with DataCentreNews India estimating that data centres consumed 240-340 terawatt-hours (TWh) of electricity in 2022, accounting for 1-1.3% of global electricity usage.
Robust growth projections
The growth trajectory for Chennai’s data centre market is impressive. According to reports from Asset Monk, the city’s current data centre capacity is approximately 87 MW, with 156 MW under construction and another 104 MW planned.
Colliers India reports that South India’s data centre market is expected to witness a 65% growth by 2030, underscoring the region’s strategic importance in supporting global digital infrastructure.
Government incentives and policies
The Tamil Nadu government has implemented favourable policies to attract data centre investments. This includes subsidies on land acquisition, reduced power tariffs, and tax breaks that enhance the ease of doing business in the state.
The Tamil Nadu Vision 1 Trillion document outlines ambitious goals for the state to become a trillion-dollar economy by 2030, with a significant focus on cloud and data centre industries as pivotal components of this vision. These initiatives have already attracted substantial investments from major players like Siemens, Yotta Infrastructure and CtrlS Datacentres.
Increasing demand driven by digital transformation
The demand for data centres in Chennai is being fueled by rapid digitisation across various sectors. According to a survey by Deccan Herald, The banking, financial services, and insurance (BFSI) sectors account for nearly 35% of total occupancy in Chennai’s data centres, followed closely by IT firms at 30%.
As enterprises increasingly adopt cloud services and digital transformation initiatives, the need for robust data storage solutions continues to grow. This trend is further accelerated by advancements in technologies such as 5G and the Internet of Things (IoT), which require enhanced data processing capabilities.
Competitive pricing and infrastructure
Chennai offers competitive pricing for data centre services, with monthly recurring charges ranging from ₹6,650 to ₹8,500 per kW. This affordability, combined with advanced infrastructure and extensive service offerings—including managed services and disaster recovery solutions—makes Chennai an attractive destination for businesses seeking reliable data centre solutions.
The city’s commercial real estate market has also witnessed growth due to these developments, with significant office space absorption reported even during challenging economic conditions.
In summary, Chennai’s rise as a prominent data centre hub in India can be attributed to its strategic location, robust growth projections, supportive government policies, increasing demand driven by digital transformation, and competitive pricing.
To address this growing demand, Arihant has identified four strategic locations in Chennai—Saidapet, Guindy, Thoraipakkam, and Ekkatuthangal—for their upcoming commercial projects. These projects will provide the modern infrastructure required to cater to the growing workforce in the data centre space.
As investments continue to pour into the sector and infrastructure develops further, Chennai is poised to play a crucial role in shaping the future of digital infrastructure not just in India but across the Asia-Pacific region.
