French automation giant Schneider Electric is forecasting substantial growth in its data center business within India, projecting an exponential rise as the nation significantly scales up its digital infrastructure over the next few years.
India's Data Center Capacity Set to Explode
Deepak Sharma, MD & CEO, and Zone President, Greater India, for Schneider Electric, highlighted the immense potential. "In India, our data center business is not the biggest yet. India has built only 1.5 gigawatt of data center capacity so far. The country has plans to build 6–8 GW. In the next three to five years, there is an opportunity for it to become the biggest business," Sharma stated.
Globally, data centers contribute a significant 30% to Schneider Electric's 40 billion euro business. India's aggressive push to expand its data storage capabilities is a key driver for this anticipated growth. Currently, 20% of all data is generated and consumed in India, yet only 3% is stored locally, underscoring the urgent need for increased capacity.
Strategic Importance and Investment
India holds a crucial position for Schneider Electric, serving as its third-largest market and a global innovation hub. The company boasts over 38,000 employees and 31 factories across India, exporting products to more than 30 countries. This strategic importance was further cemented last year when Schneider Electric acquired the remaining 35% stake in its Indian subsidiary from Temasek for 5.5 billion euros, achieving full ownership and aiming to streamline decision-making processes.
While the building and distribution segment currently represents Schneider Electric’s largest business in India, Sharma expects generation, data centers, and homes to lead the next strong growth cycle. He also emphasized that the expansion of data centers will naturally stimulate growth in other sectors. "To build data centers in India, we have to build buildings, roads, hospitals and infrastructure. I don’t think data centers will be the only segment that will fire. Housing, airport, metros and infrastructure are important for Schneider in India," he explained.
Innovation and Market Challenges
Schneider Electric has observed double-digit growth in its home and automation businesses, attributing this success to India's unique combination of affordable technology, cost frugality, and rapid adaptation. Consequently, most of the company's products are now designed and manufactured within India, with exports extending even to the US.
The company is also heavily investing in "open automation," a strategy that allows companies greater flexibility by not being tied to a single vendor. This approach enables clients to integrate software components from various providers, including Schneider Electric, to re-engineer their industrial plants efficiently.
Despite the optimistic outlook, Schneider Electric faces challenges, particularly from rising commodity prices. Sharma noted, "We use a lot of copper and silver in our products. Whatever cost goes up, we have to pass it on to the market." Geopolitical tensions, such as the West Asia conflict, also pose potential risks to supply chains for plastics and transportation, impacting the broader industry.