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The surge in over-the-top (OTT) video streaming, online gaming, augmented reality and digital commerce propelled by 5G is projected to increase data consumption, resulting in a corresponding expansion of data centres.
This rising preference for India among global data centre majors is attributed to the data localisation norms and the government’s proposed new data centre policy aimed at simplifying the rules. The new data centre policy is also expected to provide necessary clearances and infrastructure in a time-bound manner.
Global majors like Google, Microsoft and Amazon have already started setting up their hyperscale data centres in India.
Given the current investment pipeline of Rs 1.50 lakh crore, India is expected to witness a six-fold increase in data centre capacity to 4,900-5,000 MW over the next six years, said ratings agency ICRA.
“The key triggers for digital explosion in India are the increasing internet and mobile penetration, the government’s thrust on e-governance, digital India, adoption of new technologies including cloud computing, IoT, 5G etc, growing user base for social media, gaming, e-commerce and OTT platforms,” said Anupama Reddy, vice president and co-group head, corporate ratings at ICRA.
According to her, this coupled with favourable regulatory policies including the draft Digital Data Protection Bill 2022, providing infrastructure status to data centres, special incentives from central and state governments like land at subsidised cost, power subsidies, exemptions on stamp duty are expected to boost data centre investments in the country.“The current data centre capacity in India is significantly lower than the fast-growing requirement. Being a high capex industry requiring significant capacity build up, we believe that there is a significant equity investment opportunity to back partners in creating capacities,” said Rahul Shah, executive director, Kotak Investment Advisors, which will be investing $800 million to support the development of 5-7 large data centre assets through Kotak Data Center Fund.
The Kotak fund will be investing in data centres across key cities including Mumbai, Chennai, Noida and Hyderabad that are witnessing significant rise in demand for these services.
According to experts, discounts being offered on usage of renewable energy and procurement of information technology components made locally and several such other concessions will also help the growth in investments.
Additional factors, such as the new submarine cable infrastructure linking Mumbai and Chennai to Singapore, South East Asia, Europe and the Middle East, will help position India as a more attractive Asia-Pacific location for data centre development, expansion and investment in the years to come.
Data localisation and data explosion are paving the way for a data centre revolution in the country. To cater to the increasing demand, Indian corporates like Hiranandani Group, Adani Group in joint venture with EdgeConnex, the Reliance Group are all investing in this segment.
Foreign investors including Blackstone Group, CapitaLand, Princeton Digital Group have also started investing massively in developing data centres. Along with them, existing players like NTT, CtrlS, Nxtra and STT India are also expanding their capacities.
With a population of over 1.4 billion, the world’s fifth-largest economy in terms of GDP and an expanding focus on the digital delivery of services, India represents a key market opportunity to extend coverage, capacity and connectivity options for the world’s leading service providers as well as local and global enterprise customers.
India is a high-growth market, with data centre demand expected to significantly increase, driven by rapidly growing data consumption, the digitisation of the economy, the onset of 5G and data localisation trends.
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