Are data centers next BIG business avenue? Governments, firms eye big pie of evolving data hubs

India’s digital infrastructure is growing rapidly and with the emergence of 5G, Internet of Things and Artificial Intelligence, the focus is shifting towards physical infrastructure to support this growth. According to a NASSCOM report, the global data center market is expected to receive an investment of $200 billion per year by 2025. The IT ministry is also planning to offer incentives of up to Rs 15,000 crore for data centers under a national policy framework. According to a report by ASSOCHAM-EY, India is well positioned to become a global hub for data centers with an estimated growth of $8 billion by 2026. States across India are focusing on data centers and promoting investments in the respective sector. According to the latest JLL report, India’s data center market is expected to double to 1318 MW in the next two and a half years from the current 637 MW capacity.

According to reports, Nxtra Data Ltd, a subsidiary of Bharti Airtel, is investing Rs 600 crore in the development of its biggest data center in Kolkata. The center will serve the markets of SAARC countries as well as East and North East regions. The company will invest Rs 600 crore to build a 25 MW data center in Bengal Silicon Valley, Kolkata and will be fully operational by 2024. Nxtra is on an expansion spree and will invest over Rs 5000 crore in the next four years to increase its capacity by over 3X to 400 MW. The state government has already earmarked 250 acres of land for Bengal Silicon Valley in New Town as the demand for land by various companies for data centers could reach up to 50 per cent of the total.

The governments of Karnataka, West Bengal and Tamil Nadu have also signed several MoUs with firms to promote setting up of data centers in their states. The Uttar Pradesh government led by Chief Minister Yogi Adityanath had in June this year announced setting up of four data centers in the state for Rs 15,950 crore. The government said it would create 4,000 direct or indirect jobs. The state has already formulated a data center policy which offers various incentives such as capital subsidy, interest subvention, stamp duty exemption, energy related financial incentives and various other non-financial incentives. Various developers including NIDP Developers Private Limited, NTT Global Data Center, Yota Infrastructure and Cloud Infrastructure India are already in the process of setting up data centers in the state.

Yotta Infrastructure from Hiranandani Group of Companies has already launched its Yotta D1 center at Greater Noida Data Center Park in October this year. Both Yotta and NIDP are part of the Hiranandani Group.

Yotta Infrastructure CEO Sunil Gupta said, “The next two years will witness the launch of a new data center at GIFT City, Gujarat in 2023, followed by the launch of our first data center at Chennai Data Center Park in 2024. Navi Mumbai in detail and capacity additions at the Greater Noida data center parks. Yotta NM2, our additional data center at the Navi Mumbai campus, will facilitate 8000 rack capacity. At our Greater Noida campus, we will begin construction of two additional data centers, Yotta D2 and Yotta D2, they will have a combined capacity of 11,000 racks.”

The company plans to build data centers in Mumbai, Pune, Kolkata, Chennai and Bangladesh. Yotta’s investment in setting up the data center park in Kolkata will be around Rs 8,500 crore, while the Chennai data center park will involve an investment of over Rs 4,000 crore. Recently, Yotta also signed an MoU with the Uttar Pradesh government 39,000 crores in the state over 5 to 7 years. This investment will go towards expansion of Yotta’s Greater Noida Data Center Park. Yotta also plans to invest over Rs 9800 crores in edge data centers Has been,” Gupta said.

The company plans to set up edge data centers in Bhubaneswar, Chandigarh, Coimbatore, Guwahati, Indore, Jaipur, Kochi, Lucknow, Mangalore, Nagpur, Surat, Varanasi, Visakhapatnam and other cities.

Other companies are also working to expand their presence and capacity across the region. One of them is Web Works which has its presence in Bengaluru, Hyderabad, Chennai, Navi Mumbai and Noida.

Talking about the future of data centers, Nikhil Rathi, CEO and founder of Web Works said, “By 2025, data center investments are expected to exceed $20 billion. Around 75% of the DC market is located in Mumbai, Chennai, and Bengaluru with the remaining spread in Delhi NCR, Hyderabad, Kolkata, Noida and Pune. 5G, IoT is expected to enable the movement of computing towards the network edge for improved latency, new small-scale Edge will drive the emergence of data centers across the globe. With increasing demand, growing job opportunities in the data center industry run parallel. It is expected to grow by 2% by 2023 and 3% by 2025. Data centers is also expected to invest in the necessary changes to prepare for 5G adoption.”

On the other hand, giants like Google and Microsoft are also working to expand their capabilities and reduce their carbon footprints. Both Google and Microsoft have announced new agreements to reduce the carbon footprint of their IT operations by using renewable energy sources in their data centers. According to a report, Google has signed a power purchase agreement (PPA) with Engie, a French utility company, for the Moray West offshore wind farm in Scotland to generate 100 MW of energy to power its UK operations. Meanwhile, Microsoft announced a PPA to supply more than 900 MW of renewable energy in Ireland for its data centers.

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