The data centre growth in India is currently exceeding the annual growth rate of American and European data centre market.
Yet many cloud computing companies have not yet made their entry into India, which points to the opportunities in the data center market.
The question then is – how do we reach there and what would the data center market in India by 2025 look like?
These were discussed in detail at W.Media’s Digital Week South Asia’s keynote panel discussion titled ‘How the Indian Data Centre market will look by 2025- Challenges & Outlook’ which was moderated by Jabez Tan, Head of Research, Structure Research. The panellists Pankaj Agrawal, Partner, Capitel. Alex Perkins, Chief Development Officer, Stratus Data Centres. Darren Hawkins, CEO & Founder SPACE DC. Kamal Nath, CEO, Sify Technologies. Sajnay Bhutani, Senior Vice President, AdaniConneX.
“Policy players have a very important role in the development of data centres and many hyperscalers have started building their own data centres”, said Sanjay Bhutani, Senior Vice President, AdaniConneX.
National DC Policy
The government of India is looking to develop data centre parks in the future and a few things in terms of policy making would strengthen the process.
This includes a policy which will focus on the power infrastructure wherein everybody could benefit from a common infrastructure.
In November 2020, the Indian government came out with a draft of a national Data Centre (DC) policy (which is still in discussion stage), which was followed by states such as Uttar Pradesh, drafting its state data centre policy.
Bhutani further underlined the importance of GST and how it works as an incentive for the customer.
“They bring in multimillion dollar multimillion dollar equipment in a data center while coming to us. I think if we are able to negotiate that GST, which is about 9-10 percent, a ballpark number, I think that that attracts them.” Additionally, Data localisation, which is an important policy part, I think is going to play a major key role and all of us are seeing that it has some attraction”.
“A real single window clearance is something which is required from all these states so that our guys, our teams should get an absolutely Express way to get a clearance while making a project in Indian contracts. Currently the project takes about 18 to 24 months to deliver a project wherein if I have to compare it to the developed countries, they take about 14 months.
I think this policy also can play a major role while giving comfort to a hyper scalar tenant process”, Bhutani stated.
“From the past few years the cloud demand has been increasing in India and it will continue to increase in the near future”, said Pankaj Agrawal.
He further added that earlier people were using Whatsapp and Instagram but nothing was getting hosted. There is a lot of cloud retained demand in India even the demand for cloud migration is increasing.
India has some great potential for growth in the data centre sector, in terms of the location Mumbai and Navi Mumbai have some great potential where there are key learning stations including Chennai, stated Perkins.
He further added that these places will be key hubs in India for serving the rest of the country. Data localization and renewable sources of energy will also play an important role in the development.
Talking about the development of Data centres, subsea cables will play an important role in building the infrastructure, according to industry watchers.
Factors a play
Three main factors play an important role in the process of digitisation in India first there is massive digitalization drive going on in India which will help organisations to build infrastructure. Second is Data localization and third is the huge demand for content.
India is a large country and there is a constant increase in the demand for OTT. There are three different types of customers, first is the hyper scale cloud providers, second are the software providers who are coming to India and third are the enterprise ones from BFSI to manufacturing and other sectors, stated Kamal Nath.
“We are we are in process of building network of data center, which are all big cities, which is Mumbai, Delhi, Chennai, Hyderabad, and some of the more towns, I think the key segments are have been fairly well defined by our colleagues, which is hyperscalers, the one who is actually driving the major growth in India, and enterprise behavior is also continuously changing.
They are thinking beyond one or two years and instead are actually planning for a long period and which is rightfully so, because of pandemic and the digital demand is still growing at a very fast pace”, added Bhutani.
Tax reforms
Various tech giants are keen on working with India and developing data centers here. Giving an example of Google, Hawkins explained how Google has decided to invest $10 billion in India. He further added how India is developing its own cloud services and looks forward to making a place in the overseas market.
The Tax reforms of India have been helpful and companies look forward to investing in the Indian market.
When it comes to the development of a data centre the main challenges that organisations face is with respect to the permits, land, power and connectivity.
Challenges faced by international organisations include the ones around land and the construction area are well known to the local groups which can be dealt with but it is the administrative and procedural work which requires help.
Getting the access to reliable power along with a renewable source is another challenge and fiber connectivity is another aspect that organisations look for while setting a data centre.
Along with the access to the available resources, a lot of data centre players coming to the market increases the competition, pointed Agrawal.
In terms of the sustainability and the efficiency of the data centre, Hawkins underlined the fact that the data centres are super-efficient but bringing the renewable energy to power its garangutan needs is a challenge.
New players entering the data centre market will look forward to adapting renewable sources of energy.
