As data centres mushroom, states go all out to woo investments

The highlight of India’s digital transformation story has been the rapid growth in data consumption over the years with a promise to cross the 1 GW mark by 2023 — twice what it was (499 MW) as of the first half (January to June) of 2021.

The ever-increasing data consumption pattern got a boost from the convergence of enterprises, the government’s digital push, data storage and privacy regulations, and operators keen on serving other markets. The 5G rollout, cloud consumption and real-time applications will only help the data centre industry flourish over the years.

Digital transformation in India is expected to create an economic value of $1 trillion by 2025.

Projected data consumption pattern in next 5 years

The future consumption patterns per smartphone give a clearer picture of the upwards trajectory. For instance, the average data consumption will rise over three times to 50 GB per month in 2027 compared to 14.73 GB in October 2021.

India promises to be the global data centre hub mainly backed by its strengths of natural resources, strategic location, competitive costs, skilled resources and large user market, said a study published recently.

The study, “Data Centres: The building blocks of digital revolution in India,” projects that the expansion of the Indian data centre industry will be supported by accelerated adoption of digital infrastructure led by the coronavirus pandemic, rising digital usage, cloud consumption and national 5G rollout.

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The industry is poised for a sustained period of growth, driven by a diverse range of consumption and demographic trends, as per the study conducted by Nxtra (the data centre subsidiary of Bharti Airtel), in association with real estate consultancy and professional services firm JLL India.

Centre’s backing

The data centre industry is gearing up for the upward trend. For instance, data centre operators have acquired land parcels at key locations to provided scalable and seamless options to their clients. It has led to land price appreciation in data centre hubs. Cloud companies with self-build plans, on the other hand, are in the process of acquiring land at new locations in line with their growth strategy.

On its part, the Union government has brought in the Draft Data Centre Policy. The grant of infrastructure status to the industry will further accelerate DC expansion due to the availability of long-term credit at competitive rates.

States offer incentives 

States aren’t far behind when it comes to attracting the best in the industry. Tamil Nadu is keen on attracting operators for setting up a new centre. As per reports, Chennai is one of the cheapest destinations to set up data centres in the country. The Tamil Nadu government has offered to provide electricity, land and connectivity infrastructure along with fiscal and non-fiscal incentives besides many other benefits.

Chennai has the presence of global BFSI (banking, financial services and insurance) companies, a solid manufacturing base and lower set-up costs. Its strategic location, with lower global latency, especially to APAC countries, has attracted the attention of many operators to the southern state capital.

Mumbai and Chennai are leading the race as they have the inherent advantage of a dense wet cable ecosystem offering the best global latencies. Mumbai has been the frontrunner due to its central location, reliable power and cable landing stations. Of the 499 MW inventory, the city accounts for 45% and had the highest number of cable landings.

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Telangana too has its independent data centre policy.

Delhi-NCR has seen growth due to regulatory incentives and the potential for vast demand from government organisations setting up public community clouds. Pune, too, has shaped up as a redundancy option for Mumbai due to its proximity to the financial capital and better risk profile as it’s landlocked.

Bengaluru has a higher proportion of on-premises data centres from major global companies and domestic IT firms. Kolkata, located in the densely populated eastern region, is expected to have a new cable landing station in the next few years and emerge as an important location.