Cloud, tech shift, localisation law drive data centre push in India
Increased Cloud adoption, data localisation demand, and adoption of new technologies such as 5G, Internet of Things (IOT) are driving the data centre demand in India.
The Indian data centre industry is expected to more than double to 1,007 megawatt (Mw) by 2023 from its existing capacity of 447 Mw, said a report from JLL. Mumbai and Chennai are expected to drive 73 per cent of the sector’s total capacity addition during 2021-23, while cities like Hyderabad and Delhi-ncr will emerge as new hotspots.
With increased data consumption by both enterprises and consumers, which received an additional push due to the pandemic, the government has given its support for the growth of this industry. Rather the government’s draft Data Centre Policy aims to make India a ‘global data centre’ hub by conferring infrastructure status to the industry.
Sharad Sanghi, chief executive of NTT, India, believes that other than the consumption moving to Cloud, and the hyperscalers' entry into India, adoption of data centres has a business case for enterprises as it makes them focus on core technology. “The recent advent of 5G and edge computing is just adding up to the demand for data centres,” he said.
For instance, Sanghi said edge computing would further add to the demand as data centres would now move to small cities. “There are two types of data centres. One, core centres that may be located in the metros and will have the storage and compute application. Two, as bandwidth demand grows, it makes sense to put the content closer to other users, which reduces latency issues. This is what is making many to take data centres closer to users, this will take off in the coming years,” said Sanghi.
NTT, the world’s third-largest data centre player, said last year it would invest $2 billion in ramping up its presence in India. “Of this, $1.51.6 billion is being invested in acquiring land parcels and building data centre parks, the remaining $400 million will be used for undersea cable connection to data centres in Chennai, Mumbai, and Kolkata. We are also setting up renewable energy plants across the country. We have already set up a 62.5-Mw plant in Maharashtra, 20 Mw Karnataka, and we are looking to augment that by another 100 Mw by setting up a plant in Maharashtra,” he said.
The current demand for data centres is just the tip of the iceberg, say industry experts. Companies working in the field believe the Personal Data Protection Bill will further give a push for data centres in India. The growing consumption of data and future growth in this is driving players in this sector to ramp up their data centres footprint in the country.
“If you look at the demand for data centres due to data localisation mandates, then the demand is not much. Because data localisation mandate is restricted to certain sectors like banking and finance, pharma, and health care. The real shift will come when the Personal Data
Protection Bill will come into force,” said Sunil Gupta, co-founder and chief executive, Yotta Infrastructure Solutions, a 100 per cent subsidiary of Hiranandani Group.
“Real data consumption happens in media, video-led data, and there is no law at this point that mandates that this data should be in India,” he said.
Gupta said that with IOT, AI, and ML coming into play, edge computing in data centres will also gain traction. “This is being driven by the need of accessing data instantly without a minute delay in buffering. Once you have 5G, the real cases of machines and sensors talking to each other in microseconds to a central place in real time will need access to data centres that will allow this process to take place. The computing has to happen in real-time. That is why we see demand for edge data centres increasing,” he said.
Yotta Infrastructure Solutions is working on creating edge data centres through partnerships.
Gupta believes that as more and more devices get connected to the internet this will only accentuate the need for data centres. “In the past 5-6 years, the size and scale of data centres that are coming in India have changed drastically, especially with the entry of hyper-scalers who are looking for global norms. One of the fallouts of this is adopting an environmentally friendly or sustainable way of ramping up data centres, which is making us adapt and create our renewable-based power,” said Gupta.
The company is fast expanding its footprint. For instance, Yotta Greater Noida centre with 5,000 racks will go live in April, with almost 80 per cent of space contractors. Along with this, the company will start its Chennai park. Going ahead Yotta wants to expand to cities like Kolkata (20 acres), Pune, and Gift City, Gujarat. By 2022, Yotta plans to have a capacity of 17,200 racks across Mumbai, Delhi and Chennai.
“The growth prospects of India’s data centre industry have led to approximately $400 million merger and acquisition deals over and above the organic investments by operators during 2020, as many operators have announced expansion plans over the next few years. This promising asset class is expected to provide a greenfield real estate development opportunity of 6 million sq ft over the next three years,” said Rachit Mohan, head, Data Centre Advisory-india and co-head, Office Leasing Advisory JLL– Mumbai, in his report ‘India Data Centre market Update 2020’.
The JLL report said the rapid growth of the data centre industry has meant increasing energy consumption and its impact on the environment. Global Cloud players setting up bases in India aim to reduce their carbon footprint and are looking at data centres that provide sustainable energy alternatives. Data centres operators are tying up for renewable energy power contracts and introducing sustainability measures across the DC operations.
“India’s renewable energy capacity at 90 gigawatts accounts for 25 per cent share of the installed power capacity and provides tremendous scope for development of green data centre industry is thus expected to increase its pace of sustainability in sync with global trends,” said the report.