Post pandemic, CapitaLand has doubled the investment in the data centre business and acquired data centre facilities.

Surajit Chatterjee

Managing Director - Data Centre Group, CapitaLand India

Even before the outbreak of the Covid pandemic, there were predictions of data explosion and India emerging as a major player in the IT space. How do you access the growth of the Data Centre market in the coming 2 years?

India is a digitally young country, and we are experiencing an increased consumption of data and internet bandwidth that is majorly driven by the increased use of smart devices and the expanding reach of social media. India Inc. hadrightly predicted this trend even before the Covid pandemic, and many organisations had already embarked on their digital transformation journey. In the last few years, the government too has been strongly advocating various Digital India schemes for ease of governance and increased citizen convenience. The Covid pandemic has only accelerated the process. Even individual businessmen have started using digital means to operate their business & profession seamlessly in today's time. Consumers have also switched from conventional media entertainment to over-the-top (OTT) platforms. The pandemic has also altered the way educational institutes impart their courses.

The following two years will be a game-changer; we will witness the transition from 4G to 5G technology. Businesses will see increased usage of IoT, AI, the implementation of data protection and localisation policy will further pave the way for digitalisation. All these factors will boost the volume of data produced and consumed in the country, which naturally results in a greater demand for the data centres that will act as a backbone that caters to this demand.

Tell us about the shift in preference towards carrier-neutral data centres and how you are preparing yourself in this regard? Are colocation and carrier-neutral the future of data centres? What are the challenges associated with this?

Carrier neutrality is an essential factor that CapitaLand India Data Centre would be providing to our clients looking to outsource their data centre requirements. It allows inter-connection between many colocations and network (telecommunications, ISP) providers, providing greater flexibility from a client's perspective. Clients can expect competitive pricing, sufficient bandwidth, better connectivity and an array of options, as such data centres are partner agnostic. Our colocation data centre will also provide a high level of control and scalability while reducing the need to re-engineer clients' applications. We will be able to offer greater protection from business-critical data loss as it will be possible to find a carrier that provides the service levels and guaranteed uptime that meets or exceeds our clients' business requirements. It would also allow clients the flexibility to make quick changes in their facilities management strategy when required.

The major challenge that data centre operators generally face in this regard is the feasibility of telecom ISP beyond the immediate perimeter of a data centre's location. When architecting the connectivity for robustness, it is essential to recognise that many telecom carriers lease fiber from amongst each other. Consequently, their network traffic travels along the same pathways over long distances, potentially defeating clients' dual-path strategy. To guarantee fully redundant paths, a careful analysis must be made. The goal should not only be to guarantee redundancy but also to minimise latency by minimising fiber distance.

With technology comes the challenges of data privacy and security; what is your take on the government's data sharing and privacy policy? How are data centres gearing up to ensure compliance and also provide a secure and scalable system to their customers?

GoI's initiatives towards data localisation and crossborder data transfer indicate that data is viewed as a national asset. Hence, the new legislation is aimed to protect and conserve sensitive data. Currently, several directives and regulations are put in place for data localisation across industries. e.g., the Insurance Regulatory and Development Authority of India (IRDAI) has rules on outsourcing activities by Indian insurers that restrict the outsourcing of certain activities such as legal services, banking services, and courier services. These regulations also specify that all original policyholder records should be maintainedin India. Similarly, government departments that are engaged in providing cloud services incorporate a clause in their contracts that orders storage of data and computational results in India. Payment service providers can send data outside India for processing, only under the condition that no copies of the data are kept outside India.

CapitaLand India's security measures that would ensure our Data Centresare secure:

• Implementing and enforcing perimeter access restrictions that ensure only those who need access (both physical and virtual) have it.
• Using the right set of security tools to report and protect against digital security threats.
• Keep servers and systems up to date and patched to eliminate any known vulnerabilities.
• Having secondary systems and data backups in place that can come in handy in case of contingencies.

An uninterrupted supply of electricity is crucial for data centres. How are you overcoming such challenges?

According to industry experts, the data centre landscape continues to evolve in the country, and it is expected to grow exponentially to reach 1,007 MW by 2023 from its existing capacity of 447 MW. Increasingly, global data centre players setting up bases in India aim to reduce their carbon footprint by looking at building data centres that provide sustainable energy alternatives and are entering renewable energy power contracts. Currently, India's renewable energy capacity is at 90GW, and it accounts for a 25% share of the total installed power capacity and thus provides tremendous scope for the development of green data centres.

At CapitaLand, we place sustainability at the core of everything we do. We are committed to growing in a responsible manner, delivering long-term economic value, and contributing to the environmental and social well-being of our communities. We were also awarded Global 100 Most Sustainable Corporations in the World 2020 (Ranked 58th).

How has Covid 19 pandemic impacted the data centre market as an asset class?

According to the Department of Telecom (DoT), in April 2020, India's internet consumption rose by 13% since the nationwide lockdown in March 2020. The role of data centres was further widened by the surge in data storage and processing requirements resulting from increased levels of remote working during the pandemic period. Also, many organisations with on-premise data centres were not able to access their facilities due to them not being classified as essential services, thus increasing the need to shift to colocation space in data centres.

High entry barriers, complex management, and a greater speed of technological development/ obsolescence have resulted in most existing data centres being traditionally owner-occupied, predominantly by a few specialised public REITs. The strong concentration of market players has always had a substantial impact on the market liquidity and transparency, restricting the opening of the market to private capital. Yet over the past few years, non-specialist private institutions have slowly entered the data centre investment market, including investment managers, institutional investors, sovereign wealth funds and infrastructure funds, often through joint venture partnerships or entity deals.

CapitaLand has a long legacy in building and investing into quality real estate assets and data centre business as an emerging asset class. Post pandemic, CapitaLand has doubled the investmentin the data centre business and has acquired data centre facilities in China and Europe, and will expand its footprint in major cities of India.

What are your plans to expand your portfolio space and location wise and investment in the next 2-3 years?

CapitaLand has deep domain expertise in the data centre business that delivers scalable and flexible solutions that suit our customers' needs. Our global portfolio has more than 2.5 million sq ft of data centre space, and we leverage CapitaLand's fund management capabilities to the fullest while planning and developing our data centres.

In India, we will be provisioning a chain of world-class hyperscale-designed facilities that would support and boost the local digital economy and transformation strategies of large enterprises across verticals. In line with our phase 1 strategy, CapitaLand India Data Centre Group has already kick-started the data centre project in Airoli, Navi Mumbai. We have also signed an MOU with the Tamil Nadu government, and in the subsequent months, we are going to expand our data centre footprint in Chennai and Noida region. Hyderabad & Bangalore will be targeted in phase 2 of our data centre expansion.

CapitaLand India will develop all these projectsto ensure control over the design and quality of the infrastructure. Initially, we would be offering colocation and built-to-suit services and gradually transition to managed hosting services. Post development, all the above-mentioned data centre projects will be wholly owned and operated by the CapitaLand Group. We are here for the long haul, and in the near future, we look forward to service Indian enterprises by providing world-class data centre infrastructure.

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