Chennai has been one of the major cities of interest for investors when it comes to setting up data centres. Due to the presence of big financial firms, a lot of data is generated. Currently there are more than 15 data centres which are live & functional in Chennai. The estimated demand for data centres in Chennai will increase drastically.
The Tamil Nadu data centre policy is playing a major role as it aims to cater to requirements of data centres and provide an attractive business environment.
Currently, Chennai has the third-highest data centre capacity in India, after Mumbai (199 MW) and Bangalore (57 MW). Chennai also has high occupancy levels (83 per cent) due to space taken up by large cloud companies.
In 2020, the Adani Group said that it will invest Rs 2,500 crore to set up a ‘hyperscale’ data centre (DC) in Chennai, called Adani Chennai-1. The intention was to transofrm Chennai into Southeast Asia’s digital hub. Adani Chennai-1 DC will be located at the Siruseri IT Park wherein companies such as Tata Consultancy Services, Cognizant and FSS Ltd. are located.
It will be the biggest hyperscale tier-3+ DC in Chennai with 32 MW IT load, and a one-stop-shop for the telecom and IT infrastructure needs of hyperscale customers, the Adani Group said. The move is expected to give a boost to the city’s attempts to become the country’s second major DC hub, after Mumbai.
Traditionally, Chennai has been a hub for data centres for telecom operators. Bharti Airtel, through its subsidiary Nxtra has established a data centre in Siruseri, and is currently constructing its second data centre. Similarly, Vodafone and Reliance have established their data centres in Siruseri. Tata Communications Limited (TCL) had acquired the VSNL Earth Station in 2002. ST Telemedia Global Data Centres (STT) acquired this TCL asset in 2016 to establish their data centre.
Apart from STT, NTT have established their data centre in Velapanchavadi, which is 6 km from the Ambattur micro-market. Sify has established their data centre in Taramani. Their proposed second data centre is to be established in Siruseri.
Tamil Nadu DC policy
The government of Tamil Nadu, on its part is proactive and seems to understand the importance placed on ‘knowledge economy’. Its Data Centre policy has been put in place to develop Tamil Nadu as the number one destination for Data Centres.
The policy applies to data centres incorporated from April 1, 2021, to March 31, 2026.
Facilities will be able to buy power from the state-owned Tamil Nadu Generation and Distribution Corporation (Tangedco), and get 100 percent subsidy on the tax on that energy for five years. Tamil Nadu offers an inherent advantage for Data Centres with high submarine cable network connectivity, extensive IT & ITeS Infrastructure, technically qualified workforce, State’s expertise in Data Centres, robust transport infrastructure and pro-investor policies, said Nikhil Rathi, Founder & Director, Web Werks India.
With 11 per cent share of total IT investments in India, Tamil Nadu is the preferred IT destination in the Country. Currently there are 18 dedicated IT/ITeS Special Economic Zones (SEZs) in the State. Chennai is the SaaS Capital of India and a leading Outsourcing Hub as well.
Rathi further pointed out that Tamil Nadu offers the largest pool of technically qualified professionals in the country. Around 1.16 lakh students specialise in the area Information Technology, Computer Science, Electronics & Telecommunication annually.
The State Government recognises the power-intensive nature of the Data Centres. Tamil Nadu is a power surplus State and a frontrunner in renewable energy.
The State shall encourage and support the operations of Data Centres, especially those that utilise renewable energy for their projects, through the following incentives to the projects with an investment above Rs.500 crores and those who meet at least 30 per cent of their energy consumption from renewable energy sources, the bill read.
Electricity Tariff: Data Centre units/parks can purchase power from Tamil Nadu Generation and Distribution Corporation Ltd. at prevailing industrial tariff rates as per the governing TNERC regulations.
Electricity Tax Waiver: Data Centre facility/Data Centre park shall be eligible for 100 per cent subsidy on power purchased from the Tamil Nadu Generation and Distribution Corporation Ltd. or generated and consumed from captive sources for 5 years from the date of commencement of commercial operation
Dual power from grid: Data Centre units or parks with a sanctioned load of 50 MW or more shall be provided with dual power (two different grids from two different locations/providers).
The Tamil Nadu government in the month of July had signed a memorandum of understanding (MoUs) with Singapore-based CapitaLand and WebWerks for Rs 1,900 crore, to set up two data centres in Ambattur. The MoUs were signed at an investment conclave in the presence of Chief Minister MK Stalin.
The development comes as Guidance has signed MOUs with nine companies to set up data centres in Tamil Nadu with a proposed investment of Rs 16,927 crore and employment potential of over 9,000 jobs over two years.
In the same month Rathi in an interview with the New Indian Express had announced that Web Werks will be setting up a 20MW data centre in Ambattur at a cost of around Rs 750 crore and it will generate direct employment to 100 people. (For Reference
International connectivity through submarine cables
A number of major intercontinental submarine cables connect India to APAC countries, Africa, Middle-East and Europe. With hundreds of data centres already operational and several more in the works, the country has become the fastest growing data destination for global brands.
“India currently has 15 submarine cables (17 if the Seacom and MENA are counted as separate cables). The existing cable-landing stations are in Mumbai, Cochin, Chennai, Tuticorin and Trivandrum.
The distinct geographical positioning of India has made it ideal for two major submarine cable landing hubs. On the western coast, it is the Mumbai, Middle East, Europe corridor and on the eastern coast we have the Chennai – Singapore corridor,” said Rathi.
He further explained that Chennai’s close proximity and easy accessibility with these key cities serve as an important factor that is attracting data centre companies to the city.
Tamil Nadu has the second highest number of submarine cable landing stations in India housing over 30 per cent of India’s subsea cables which connect to 264 landing stations globally. Submarine cables offer two advantages over communication satellites: shorter communication distance and lower susceptibility to weather conditions ensuring that the former is a more secure, reliable infrastructure with lower latency.
The State has an excellent Optical Fibre Communication (OFC) network and availability of reliable, large bandwidth. With 6 Submarine Cables offering 14.8 TBPS capacity in Chennai and 1-TBPS in Tuticorin, these cities offer the largest bandwidth connectivity among the Indian cities and are the closest landing stations connected with the West Coast of the United States of America.
Importance of intra-city networking and cost of infrastructure
While the importance and need for new international submarine cables can hardly be overstated, it is important to build a domestic network of cables between cities overland.
“Unless direct connectivity to data centers located in different cities is established, the full potential of the sub-sea cables will remain unexplored. The #2 data center market in India, Chennai has a connectivity ecosystem made up of 9 colocation data centers, 72 cloud service providers and 9 network fabrics,” said Rathi.
The Government of Tamil Nadu has set up the State Data Centre (SDC), Disaster Recovery Centre (DRC), Cloud Computing Facilities and Common Service Centres (CSC) for improving the access of citizens to online Government services. The State Government is undertaking efforts such as the Tamil Nadu State-Wide Area Network (TNSWAN), National Knowledge Network (NKN), BharatNet and TamilNet to improve tele-density and broadband penetration and ensure reliable and efficient telecom networks throughout the State.
The government will provide power, land, and connectivity incentives to support new data centers, chief minister MK Stalin said. But to receive the incentives, projects must involve an investment of over ₹500 crore ($66.5 million) and meet at least 30 percent of their energy requirements with renewable energy sources.
Chennai’s advantages are of immense importance to India with regard to its location and potential in the area of global internet connectivity and data services.
India’s data centre industry is expected to double capacity by 2023, on the back of increased digitalisation, rising cloud adoption and ambitious growth plans of operators.
According to JLL’s ‘H1 2021 India Data Center Market Update’, the acceleration of digitalisation has forced enterprises to scale up their IT infrastructure. As a result of digital upgrades, a strong demand for colocation or cloud facilities, across India.