Ace investor Shankar Sharma has cautioned against the hype in India’s fast-growing data centre sector, calling it similar to the telecom tower bubble of the past.
He wrote on X that the excitement is “largely a hope trade.” According to him, data centre operators spend massive amounts on infrastructure and then lease space to clients. While the customer base is bigger than in telecom towers, the power still lies with clients.
“Once you invest in capex-heavy projects, you are at the mercy of customers. They play one operator against another to get very low rates,” Sharma explained. He stressed that this is a leasing business loaded with risks such as debt, falling returns, and negative cash flow. “Play the bubble if you want, but the economics are not sexy,” he warned.
Sharma’s remarks come as the industry sees record investment interest. India’s data centre capacity, estimated at 1.1 GW in 2024, could nearly triple to 3 GW by 2030. Annual investments of $1–1.5 billion are expected to double with demand from AI, cloud services, and data localisation.
The government is also drafting a National Data Centre Policy with tax breaks, GST benefits, and incentives to boost growth across metros and smaller cities.
