India is poised to be a global hub for data centers focused on cloud computing with a projected growth of USD 8 billion by 2026 and riding on technologies like artificial intelligence, machine learning and analytics, an ASSOCHAM-EY report has pointed out.
Enabled by an ecosystem of innovation, entrepreneurship and policy support, the Indian data center market had already touched USD 4.4 billion in 2020, the report said, adding the next decade would witness an unprecedented change and new emerging technologies in the field.
Data centers in all forms, shapes, and roles will continue to aid innovation and drive technology, leading to business transformation. ”As the country has the ability to leap directly into the multi-cloud age, India will be the main data center growth hub for the next decade”, the report stated.
Currently, India has more than 80 third-party data centers with a total count of approximately 130+, which is likely to increase exponentially in the upcoming years as the country strives to become a truly digital economy.
”India has been experiencing a massive digital transformation for the past few years. The surge in internet users, massive rise of startups, fast adoption of cloud computing, and Government’s investment in the IT sector are some of the critical drivers of digital and economic growth, ” said Deepak Sood, Secretary General, ASSOCHAM.
The ASSOCHAM-EY report highlighted the favorable market conditions such as low cost of internet and data plans and increasing demand hold potential for growth.
A connection is seen between the growth of data centers and a boost to the real estate sector. Data centers are also evolving as an alternate asset class for varying real estate portfolios.
Hyperscale data centers are being developed by reputed Indian real estate developers in partnership with global operators. The real estate or the land cost for data centers is usually about 8 per cent to10 per cent of overall capital expenditure. Besides the metro cities, tier 2 and tier 3 cities are also emerging as drivers of the digital revolution.
Government Initiatives to promote Data Centers
At present India is home to prominent data center players like Reliance, Sify, NTT, Nxt Gen, Airtel, STT, CapitaLand, Adani and Web Werks to name a few.
In the second half of 2020, there was a growing clamour amongst data center operators and service providers in India. Their clarion call was to give “infrastructure” status to the sector, which in the aftermath of the Covid-19 pandemic has become the lifeline for common people as well as organisations of all sizes.
As data use grows exponentially, data centres are critical to the functioning of the internet. In one swoop, data center which was considered boring and non-glamorous had suddenly become a vehicle of transformation.
The Tamil Nadu Government has also come out with a Data Center Policy, in which it plans to provide incentives to projects with an investment of over ₹500 crores and those that meet at least 30 per cent of their energy requirement with renewable energy sources.
Earlier this year the Karnataka Cabinet approved a new policy that aims to attract investments worth Rs 10,000 crore in the data center industry by 2025. The Cabinet decided to grant Rs 100.50 crore to implement the Karnataka Data Centre Policy 2022 which offers a slew of incentives and subsidies, said Law Minister JC Madhuswamy.
The data center market in India is witnessing healthy growth primarily due to the availability of large hyper-scalers that have started outsourcing their storage needs to third-party data center providers.