Whether it's financing, entertainment, or workplace collaboration, digital is now the first port of call for all tasks. Today's organisations generate data in terabytes, and what was once stored in tiny server rooms on the premises has been relocated to enormous data centres. According to analysts, this is just the start. As enterprises migrate from legacy systems to the cloud and AI duties increase, larger and more sophisticated data centres are required, they claim. This has resulted in the entry of large conglomerates, real estate players, power corporations, and niche players into the Indian data centre industry. Just one month ago, Reliance announced that it will invest approximately $120 million in a joint venture with asset management firm Brookfield for its new data centre business.
Rachit Mohan, director of data centre (DC) advisory for India at consulting firm JLL, states that the country's data legislations and state-specific DC policies have had a significant impact on the DC industry. While the majority of demand is driven by hyperscalers (such as AWS, Microsoft Azure, and Google), retail customers across "Data sovereignty rules" (those mandating that certain types of data must remain within the country and be subject to its laws) have given the sector a significant lift. Today, however, data creation by Indian institutions, OTT players, and CDNs (content delivery networks) is sufficient for global data centre players to establish and expand here, according to Manoj Paul, MD of data centre company Equinix.
JLL estimates that the capacity of the Indian data centre sector doubled from 350 MW in 2019 to 722 MW by the end of 2022. In 2022, a record-breaking assimilation of 160 MW was reached. JLL anticipates that industry capacity will reach 1.4 GW by 2025.
India has become an important market for the Japanese multinational corporation NTT. Several years ago, the company that designs, constructs, and operates data centres had set aside $2 billion for the Indian market. Shekhar Sharma, CEO & MD of NTT Global Data Centres & Cloud Infrastructure India, states, "How you run the operations without any SLA (service-level agreement) escalations or downtimes is the key for this sector, and we have the expertise across the entire value chain."
Location criteria for establishing data centres include the availability of land, a high-voltage power distribution network, proximity to submarine cable landing stations, and dense fibre connectivity. Due to these factors and its status as the country's financial hub, Mumbai has become the most popular destination for data centres today. Due to its subsea cable network, Chennai is in second place. Delhi, Bengaluru, Hyderabad, and Pune immediately follow.
As internet usage and data generation by non-metros surge, the action is also shifting closer to users. Tier-II cities are poised to become key participants in India's data centre landscape, according to Sunil Gupta, MD & CEO of Yotta Data Services. "Enterprises and industries are increasingly reliant on edge computing for low-latency applications," says Gupta. The faster the access speed, the closest the data centre is to the user.
Cities such as Pune, Ahmedabad, Jaipur, and Coimbatore are viewed as ideal options for the expansion of the market for data centres. "These cities also have relatively lower operational costs, including real estate, energy, and labour, compared to markets such as Mumbai," Gupta continues. According to Mohan of JLL, many global actors are evaluating expansion into smaller cities by constructing mini DCs or 'edge data centres' that are typically smaller than 5 MW. Large DCs typically exceed 100 MW.
As a result of the brisk expansion of their India operations, a number of multinational corporations are contemplating more expansive endeavours. "The next step would be to determine if we can attract data from neighbouring regions and turn India into a hub, similar to how Singapore and Hong Kong have been Asia-Pacific hubs," says Paul of Equinix. On measures such as land availability and renewable energy, India appears to rank higher than other nations. Given that data centres are energy hogs, the latter is essential.
The second challenge relates to abilities. Trends such as peripheral computing, liquid cooling, AI-driven automation, and others are reshaping DC operations as the sector grows. Ashish Arora, CEO of Nxtra by Airtel, explains, "This rapid data centre expansion creates a significant demand for a skilled workforce with specialised capabilities spanning structural design, cooling design, sustainability experts, edge compute consultants, AIOps, and automation."
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