Data centres to attract Rs 1.5 lakh crore investments in 6 years: ICRA

Chennai, Feb 21

A data centre (DC) revolution is happening in India with about 5,000 MW capacity involving an outlay of Rs 1.50 lakh crore are likely to be added over the next six years, said ICRA.

Data localisation and data explosion are paving the way for a DC revolution in India with several corporates - Indian and foreign - planning to build them.

According to ICRA, Indian corporates like the Hiranandani Group, the Adani Group - in a JV with EdgeConnex, the Reliance Group, foreign investors viz Blackstone, CapitaLand, Princeton Digital Group, captive consumers viz. Amazon, Microsoft - have all started investing massively in Indian DCs. Along with them, existing players like NTT, CtrlS, Nxtra, and STT India are also expanding their capacities.

"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 (cloud computing, IoT, 5G etc), growing userbase for social media, gaming, e-commerce and OTT platforms. This, coupled with favourable regulatory policies viz. 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, discounts on usage of renewable energy and procurement of IT components made locally, and other concessions are expected to boost DC investments in the country," Anupama Reddy, Vice President and Co-Group Head, Corporate Ratings, said.

According to her, the presence of landing stations, fibre connectivity, uninterrupted power supply, proximity to tenant's headquarters and high score on disaster proofing are some of the key parameters a DC operator would look for in a location.

Mumbai and Chennai have maximum landing stations, with the former being the preferred location for a DC operator.

"Chennai's reputation took a dent due to the floods of 2017 and 2018. The other key emerging locations are Hyderabad and Pune, wherein some of the large hyper scalers are setting up huge DCs closer to their operation bases in India," Reddy added.

The government has withdrawn of the draft Personal Data Protection Bill in August 2022 and the new draft Bill, titled the Digital Personal Data Protection Bill 2022 has been rolled out.

"The new Bill has increased penalty for breaches and eased cross-border data flows where data can be stored in trusted nations compared to the earlier Bill, which had mandatory requirement for storage of personal data locally. The impact of the new Bill on demand for data centres in India remains to be seen" said Reddy.