Two sectors that rose on India’s business horizon in 2024

India is well on its way to become the world’s third largest economy in the next five years, the World Economic Forum said in a report earlier this year. This growth, while driven by traditionally thriving sectors that include manufacturing, information technology and banking, is now being boosted by emerging sectors that are projected to grow further in 2025.

According to a report by Foundit, emerging tech and evolving business sectors will shape India’s economy in the next financial year. To name a few, edge computing, quantum applications and cybersecurity advancements are some of these technologies.

Two such sectors that have emerged with prominent potential this year are global capabiliity centres (GCCs) and data centres. In the year 2024, GCCs and data centres assumed a lot of importance in India’s business sector while also entering the business lexicon of the common Indan.

What are GCCs?

GCCs are operational hubs set up by multinational corporations to manage and streamline various business functions such as technology, operations, research and development (R&D), and product engineering. These centres serve as the nerve centres for global corporations, enabling them to enhance operational efficiencies, foster innovation, and provide specialized services across regions.

In India, GCCs have become critical to the global operations of companies, with a growing focus on cutting-edge technologies such as artificial intelligence (AI), machine learning, and advanced manufacturing.

How much have GCCs grown in India in 2024?

India has seen rapid growth in the GCC sector over the last few years, establishing itself as the top destination for such centres due to its skilled talent pool, supportive government policies, and strong business infrastructure. By 2024, over 1,800 GCCs have been established by more than 1,400 global companies, with more than 100 new centres added in just the past two years. These centres now occupy over 240 million square feet of Grade A office space across the country’s top cities, including Mumbai, Delhi-NCR, Bengaluru, Pune, and Chennai.

The sector’s growth is particularly evident in the recent leasing activity. Over the past 18 months, GCCs leased an astounding 35.2 million square feet of office space, with Bengaluru, Hyderabad, and Chennai accounting for around 75% of this demand. Bengaluru, in particular, stands out, hosting around 42% of the total space occupied by GCCs, driven by its thriving tech ecosystem and access to top-tier talent.

This growth is not just in terms of office space but also in terms of the diversity of industries using GCCs. The sector is dominated by three major industries: Manufacturing, IT/ITeS, and Banking, Financial Services, and Insurance (BFSI), which together account for about 78% of the total space occupied by GCCs.

What is the future outlook for GCCs in India?

Industry body Nasscom estimates that the GCC market in India will reach $100 billion by 2030, with a workforce of more than 2.5 million people. As of fiscal 2024, GCCs in India have a revenue of $64.6 billion and employ close to 2 million people.

The Indian government is actively working on new policies to further fuel the growth of GCCs, particularly in tier-2 and tier-3 cities. These policies will provide additional incentives, including tax breaks and clearer regulations on issues like transfer pricing. They are also designed to encourage the establishment of small GCCs in cities that may not have the infrastructure for larger office zones.

The government’s plan includes a long-term focus on talent-building in specialized sectors such as generative AI, healthcare, and financial intelligence.

The demand for GCCs will continue to rise as the centres evolve from cost-saving operations to hubs of innovation. With a shift towards high-value capabilities, particularly in engineering and R&D, the growth of GCCs focused on advanced AI and machine learning technologies is expected to accelerate.

Data suggests that over the next three years, more than 70% of GCCs in India will integrate AI capabilities, and about 80% plan to invest in cybersecurity and AI-driven threat detection. This will make GCCs an increasingly central part of global business transformation, reinforcing India’s position as a global leader in innovation.

What are Data Centres?

Data centres are large facilities that house computer systems, servers, and storage systems to support digital operations. They provide essential services such as data processing, storage, and security, enabling businesses to manage and operate their digital infrastructure. With the increasing reliance on cloud computing, digital payments, e-commerce, and technologies like AI, data centres have become integral to supporting modern digital ecosystems.

They ensure that vast amounts of data are processed securely, efficiently, and at scale, meeting the demands of businesses and consumers alike.

Data Centres: The India growth story

India has seen significant growth in its data centre industry, becoming a key hub for data infrastructure in the Asia Pacific region. By 2024, the country had already attracted more than $60 billion in investment commitments from both domestic and international investors.

This growth is set to continue, with projections indicating that the total capacity of data centres will reach approximately 2,070 MW by 2025, up from current levels. The data centre footprint in India is also expected to expand to around 31 million square feet by 2025.

Mumbai remains the dominant hub for data centre infrastructure, with Chennai, Delhi-NCR, and Bengaluru accounting for 90% of India’s data centre inventory as of September 2024. The industry has been fueled by strong demand from various sectors, including BFSI (Banking, Financial Services, and Insurance), technology, and telecommunications, along with state-level policy incentives that have made India an attractive destination for global data centre operators.

These investments are further strengthened by the implementation of the Digital Personal Data Protection Act (DPDPA), which has fostered trust and legitimacy in data processing, making the country a key player in global digital infrastructure.

What is the future of data centres in India?

The future outlook for India’s data centre sector is robust, with the industry poised for exponential growth driven by factors such as AI integration, 5G rollout, and rising cloud storage demands. By 2026, India is expected to add 604 MW in data centre capacity, marking a 66% increase.

Global investors and developers are eager to capitalize on the expanding market, with notable recent investments including Colt Data Centre Services’ $1.7 billion partnership with RMZ Digital Infrastructure and CapitaLand’s $1.15 billion investment.

India’s digital infrastructure is projected to play a critical role in the country’s technological and economic growth, with large investments expected to continue as the country solidifies its position as a global leader in AI and data processing.

Tier-II cities, such as Ahmedabad, Kochi, Visakhapatnam, and Lucknow, are also expected to emerge as key locations for new data centres due to the increasing demand for regional data processing and cost-effective infrastructure.

The industry’s growth trajectory is further enhanced by supportive regulatory frameworks and technological advancements that will make India one of the most attractive markets for data centre development in the coming years.

As the demand for AI-driven data processing and data storage continues to rise, India’s data centre industry is positioned to play a pivotal role in shaping the global digital landscape.

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