India could be a lucrative market for data center providers; there is favourable real estate, power capacity, submarine fibre cable landing stations and data storage demand to propel the growth of data center infrastructure.
- By Sunil Gupta
India is fast becoming a digital economy. The current cost of mobile data in India is USD 0.26 per GB, a staggeringly small amount when compared to the rest of the world. Triggered by low tariff and availability of affordable smartphones, it is expected that data usage per phone will increase exponentially in the next five years. Piggybacking on this spike in India’s internet savvy population, global companies are introducing their digital offerings to the consumers. There’s also a surge of user-generated content leading to increased data storage requirements for many of these companies.
As Internet of Things (IoT) devices seep into a consumer’s life, an overwhelming amount of data is being generated. There is an unpredictable stream of IoT data which is being utilised to study consumer trends and create digital content that appeals to the users. The future of India’s internet network is changing; there will be almost 750-800 million users connected to internet in India by 2023!
Enterprises are rapidly adopting a cloud-first strategy to manage this sudden explosion of data. With companies moving their workloads into cloud, Gartner predicts that the Indian cloud market will reach $4.1 billion by 2020. India’s government and PSUs have also embarked on their digital transformation journeys. With the government’s push towards data localisation, global companies operating in India are now required to store their data within national borders.
All of this is leading to a huge demand for processing and computing power, storage space and analytics solutions to satisfy the data consumption needs of the modern user. Though everything today is a ‘service’, enterprises need a tangible structure to monitor the health of their applications. Data centers are needed to keep the internet running. Data just doesn’t float in the ‘cloud’, but it resides in a hyperscale data center that makes cloud computing possible.
The Indian data center market is currently operating at a capacity of approximately 700 MW, which is catering to data generated by 493 million active internet users. Compared to Europe’s data center capacity of more than 8600 MW with 460 million internet users, India will need to ramp up its data center capabilities – sooner than later. The country currently needs to develop 15 times more data center capacity to address the ever-increasing data storage needs of digital India.
As the industry awaits the fate of the data protection bill, the demand for data center infrastructure is only going to rise. Data fiduciaries will require the right IT infrastructure to be put in place at different levels of the value chain to comply with the regulatory practices for storage, processing and to access consumer data.
India could be a lucrative market for data center providers; there is favourable real estate, power capacity, submarine fibre cable landing stations and data storage demand to propel the growth of data center infrastructure. According to Cushman & Wakefield, India is expected to be the second largest investor in the data center market. Despite these positive factors, there is a vast gap between the demand and supply of hyper density data centers in India.
As it is a capex intensive industry, government can play a huge role in propelling the data center capacity by providing duty exemptions on infrastructure equipment such as diesel generators, batteries/UPS, transformers and relaxing the approval processes. A policy direction at the national level is required to ensure ease of setting up a data center in India. The industry could also benefit from a single window clearance mechanism to facilitate approvals for land acquisition, project registration with state energy development agency, grant of connectivity by STU, non-agriculture permission for land, right of way approval for setting up transmission lines, grant of open access by distribution licensees etc.
State governments of Maharashtra and Telangana are already incentivising schemes for the data center providers. Restrictions on land acquisition and electricity power, which are necessary to build the basic skeleton of a data center building have been relaxed. We are witnessing maximum investment in Mumbai and Chennai as these cities are country’s only global cable landing stations, ensuring uninterrupted data traffic from across the globe.
While the Indian data center market was an underexplored business opportunity until recently – many global conglomerates are now setting up their data centers in India to conform to government’s data localisation needs. The market will see increased interest in the coming years to satiate the growing consumer appetite for digital content, personalised digital services and increased reliance on cutting edge technology for business efficiency.
(Sunil Gupta is the Managing Partner & CEO at Yotta Infrastructure. Views expressed are the author’s own)