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How India will become the next big player in the data centre market in the coming years? Read the 4 points below to know the answer

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The epidemic has expedited most Indian and other industries’ digital transformation journeys, with internet consumption reaching new highs and organisations embracing technology to provide stability and business continuity in unpredictable times. Enterprises are progressively migrating to the cloud, and this trend is projected to continue and accelerate in the coming years. Data centres offer undeniable cost, efficiency, and scalability benefits, allowing for the development of a solid digital infrastructure to support a developing digital economy.

The capacity of the data centre industry is predicted to rise from 375 MW in H1 2020 to 1,078 MW by 2025, according to a report by property consultant JLL titled ‘2020 India Data Center Market Update’ (MW indicates IT design power load).

data center in India

Multi-tenant, hyper-scale data centres will become increasingly important as data volumes and digital consumption grow, and the increased use of technologies such as artificial intelligence (AI), machine language (ML), and the Internet of Things (IoT) will drive demand for reliable IT infrastructure. Demand is projected to be pushed by the coming of 5G, IoT-connected products, data localization, and cloud adoption. 

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With increased attention from policymakers and regulators to investors, operators, and organisations, India is quickly becoming a destination of choice for data centre operators.

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The vision and support of the Indian government are as follows:

The Indian government intends to transform India into a “Global Data Hub,” and has implemented a number of laws and reforms to achieve this goal. An ambitious incentive scheme worth up to Rs 12,000 crore has already been presented for inter-ministerial deliberations and would be tabled to the Cabinet for approval soon. Companies will be encouraged to establish data centres in the country as a result of this.

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The government plans to invest Rs 3 lakh crore in the hyper-scale data centre initiative over the next five years, offering corporations between 3% and 4% of capital expenditure as an incentive, as well as real estate support and speedier clearances. The government’s push for data localization, as well as the passage of the Data Protection Bill, highlight the necessity for significant expenditures in data centre infrastructure.

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As data centres grow, technology plays a role:

Because businesses rely on data centre operators for maximum uptime, data security, operational efficiency, infrastructure scalability, and complete reliability 24 hours a day, 7 days a week, AI and machine learning will become more widely employed for smart data management and operations. These technologies assist data centre maintenance firms foresee failure or operational bottlenecks, boost energy savings, and strengthen cybersecurity, in addition to making data centres operationally and economically viable.

Data centres are energy hogs and are thought to be one of the leading causes of global warming. On-site power generation using renewable energy sources such as solar, wind, or natural gas is becoming increasingly important for operators. To reduce their massive carbon footprint, data centres must install energy-efficient cooling systems, servers, and power supplies, as well as improve their power management. While advances in hardware and green energy are being made, cooling is a critical component of data centre sustainability, and AI/ML can help by regulating and optimising energy flows.

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States are improving their performance:

Many state governments are enacting rules that will help the data centre ecosystem grow and prosper. Land rules and power, incentives and concessions, faster approvals, strong fibre connectivity, and so on are all covered by policies.

According to a JLL report, Mumbai and Chennai are likely to account for 73 percent of the sector’s total capacity expansion between 2022 and 2023, while other cities such as Hyderabad and Delhi NCR are emerging as new hotspots. While major cloud players continue to make pre-commitments in Mumbai and Pune.

By 2023, Chennai’s data centre capacity is predicted to have increased by 2.5 times, to 133 MW. To improve the ecosystem, the Tamil Nadu government is working on a distinct strategy for data centres. Hyderabad is rising as a data centre hub, with 66MW planned to be added between 2021 and 2023, thanks to favourable policies, regulatory incentives, and low building costs.

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According to industry experts of India, the Indian data centre market will be a 6 million square foot greenfield development opportunity over the next three years, requiring a $3.7 billion investment.

Customers’ proximity, the availability of skilled labour, submarine cable access, geographic location, power, fibre connectivity, and general construction and operations will all be important factors in data centre site selection.

Prospects for the Future:

The digital infrastructure required for a digital economy is provided by data centres. As digitalization exploded during the pandemic, so did demand for data centres, with industry analysts anticipating a tenfold increase in the sector over the next 5 to 7 years. This opportunity, however, must not come at the expense of our environment, thus businesses must focus on increasing sustainably while reducing their carbon footprint.

According to a report by industry body Nasscom and global consulting firm McKinsey, India’s technology services industry could generate $300-350 billion in annual revenue by 2025 if it can capitalise on the rapidly emerging business opportunities in cloud, artificial intelligence (AI), cybersecurity, and other emerging technologies.

Nasscom Delhi

The Indian government’s recognition of data centres as “essential infrastructure” and their crucial role in attaining the country’s Digital India ambition is reassuring for the industry. The government is also finalising a new data centre strategy that will assist establish a national framework with simplified laws and enhanced ease of doing business in order to attract more investment.

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