By – Jitesh Karlekar
As the digital revolution spreads across the Asia-Pacific (APAC) region, Chennai is rapidly emerging as a pivotal data centre hub. The city’s operational data centre capacity stood at 88 MW as of 2023 and is expected to see 224 MW new supply during 2024-26, which will require investments of US$ 1.5 bn.
What’s working in Chennai’s favour?
Chennai’s strategic proximity to other APAC countries, coupled with its lower latency times than several regional hubs, makes it a preferred location for international businesses aiming for an effective and efficient disaster recovery (DR) base. Chennai’s direct international connectivity and excellent domestic linking capabilities boost its desirability factor. Despite Mumbai leading in submarine cable landings in India, Chennai’s strategic location and highly interconnected ecosystem promise a rise in new submarine cables, driving exceptional data center growth.
An established export center for the automobile industry, Chennai is now emerging as an information superhighway, connecting India’s southern region to other key business hubs across the country. Many leading data center operators already have a footprint in the city and are even expanding their existing operations. Meanwhile some new players have also commenced construction of greenfield facilities. The city’s thriving tech-oriented talent pool and favorable cost structures make it an attractive destination for large hyperscale operations, enhancing its potential as a regional data hub.
Aiding this journey is Tamil Nadu’s Data Centre policy, offering both fiscal and non-fiscal incentives for data center businesses. With provisions for reduced or eliminated stamp duty, subsidies on electricity taxes, and an enhanced regulatory environment, the policy is designed to ease businesses into the state. The establishment of single window clearance systems further streamlines procedures, strengthening Chennai’s position as a desirable location for data center developments.
But, given their heavy energy consumption, green energy sources remain a top concern for data centres. Chennai has access to its state power capacity of 31,894 MW electricity capacity of which 50 percent is derived from renewable energy sources like solar and wind power. The sustainability focus of the state further attracts global cloud and data centre businesses, many of whom are striving to attain their own eco-friendly targets.
Chennai to spearhead India’s digital revolution
Explosive digital transformation is taking place across India, and it is estimated to generate an economic value of US$ 1 Trillion by 2025. Data centers will form the backbone of this transformative journey. Chennai, with its convergence of strategic location, cost-effectiveness, talented workforce, and robust green energy options, is set to lead the pack. Chennai is poised to join Mumbai, in spearheading India’s digital story into the future, paving the way for India’s foray into the digital era.
*Jitesh Karlekar is Director, Research – APAC and India Data Centers, JLL
