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Data Centers Support the economy by Attracting BFI’s

Roopesh

A report by JLL stated that India’s data center industry is expected to attract approximately $3.7 billion between 2021 and 2023 

The Indian data centre market has grown 48% over the last three years from 540 MW in 2019 to over 800 MW of installed capacity in 2022

Roopesh Kumar, Head Datacenter Business at Sify

What role does datacenter play in boosting the economy of a country? 

A data center is typically the hub of the ambition of any company to go digital; the network connecting it being the spokes.  

There are macro and micro advantages that a Data Center can bring to the economy of the land. 

Among the macro-advantages is the attraction of foreign direct investments, establishments of REITs, concentration of technology infrastructure, assurance of power and other utilities, support for small and medium industries, offshoring of captive colocation unit to specialists and the assurance to the digital transformation services to the clientele. 

Among the micro advantages are the seeding of a ecosystem around the data center facility, the demand for specialist workforce not just at the DC, but also job creation across various sectors, including construction, electrical engineering, IT infrastructure, network management, security and data analytics.  

How is the datacenter market in India shaping up? 

Data centers in India are expected to lead the next wave of real assets investments by growing at a compounded annual growth rate (CAGR) of nearly 40% to reach a capacity of around 1,700 MW by 2025, on the back of investments worth $5 billion, according to an Avendus Capital report. The Indian data centre market has grown 48% over the last three years from 540 MW in 2019 to over 800 MW of installed capacity in 2022. Currently, developers are addressing a pipeline of over 3,000 MW. 

From an investment perspective, a report by JLL stated that India’s data center industry is expected to attract approximately $3.7 billion between 2021 and 2023. This investment influx is driven by the increasing demand for cloud services, data storage, and digital transformation initiatives across industries. 

Given the power intensive nature of the business, this growth will spur demand for Green building initiatives and ESG audits. The time is ripe for the country to throw its weight behind machine learning and big data analytics if then intend to fully exploit India’s potential to be the capital of Data Centers in Asia.  

What kind of government policies are facilitating the growth of datacenters?  

The National Digital Communications Policy 2018 aims to attract investments of $100 billion and create 4 million direct and indirect jobs in the digital communications sector, which includes data centers. Additionally, the Data Center Parks Policy introduced by the Ministry of Electronics and Information Technology encourages the development of data center infrastructure across the country. 

The Indian government has launched several initiatives to support the growth of the data center 
sector. The National Digital Communications Policy 2018 aims to attract investments of $100 billion and create 4 million direct and indirect jobs in the digital communications sector, which includes data centers.  

Additionally, the Data Center Parks Policy introduced by the Ministry of Electronics and Information Technology encourages the development of data center infrastructure across the country. 

Even the state governments are announcing their data center policies with many incentives and building development rules supporting data center building specifications. This is a great support for the data center community. 

What kind of power and water supply requirements do datacenter providers require to decide a location? 

Power as you all know is the key element in developing a data center building or park. Easy and faster availability fo quality power is always the decision making factor while selecting data center location. Closest to a power grid or high voltage substation is an ideal choice. Water which is another element a data center needs, availability of continuous supply of water will definitely be a deciding factor of data center location. 

What are the business drivers of datacenter market in India?  

Hyperscalers and domestic BFSI are the most aggressive adopters of DC colocation space. Next in line is cloud-born startups and automatio- dependent business. The content service providers who attracts large number of data usage are another driver for large capacity data center and network services.  

What kind of business imperatives/use cases are driving the growth of datacenter services? 

Scalability is the major factor that drives the data center business. Whether it is hyperscalares, BFSI all except on demand capacity growth in the shortest time possible, such facilities defines the growth and scale of data center services. 

What is the estimated ratio of hyper-scalers versus co-location capacity in the country? 

During the initial years, Data Center colocation was largely dominated by retailers, in the midst of expansion, who sought to offshore their IT investment to specialists. This resulted in them dominating the market.  

Over the years, as the DC infrastructure attained a level of maturity, the country became a destination for DC-focused investments. This drew hyperscalers from across the globe to India who today account for 60-70% of the DC occupancy. 

Which regions/states in the country are witnessing more datacenter investments and why? 

There are certain magnets that are unfailing for a Data Center builder/promoter. Foremost among them is the ease of doing business in a geography. If the administration sees DCs as critical to attracting a deep-technology ecosystem and pursues relevant measures, DC builders will make a beeline for the location.  

Equally important is the profile of the location. Is the location an important financial destination or a power center or sits at the crossroad of utilities? For e.g. coastal cities are perennial favorites because of the international network cabling that terminates on its shores and require a DC destination. For e.g. Mumbai and Singapore.  

Local government’s are also aware that this is a power intensive business, and hence are keen to encourage and incentivize the use of renewable energy as a power source. In india we are seeing Mumbai continue to be the data center hub of india, where other cities like Chennai , Hyderabad , Noida following this race. 

What kind of green initiatives/policies/measures datacenter providers are embracing to make it a sustainable proposition? 

  • Integrated renewable energy sources. 
  • ENERGY STAR-certified Hardware. 
  • Precision air conditioning including hot/cold aisle containment. 
  • Dynamic frequency scaling, server power capping, and balancing computing needs with energy efficiency. 
  • Data Center Infrastructure Management (DCIM) 
  • Waste Heat Recovery 
  • Energy-efficient lighting alternatives like LED lighting 
  • Green Building Design 
  • Environmental Certification 

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