SHAPING THE NEW ERA!

Driven by growth in digitalisation, rising cloud adoption and ambitious growth plans of operators, India's data centre industry is expected to double capacity. As a result of digital upgrades, strong demand for colocation/cloud facilities, which offer scalability, security, and connectivity at lower costs, has been witnessed across India. Construction Times looks into the evolving market, demand drivers, technologies and solutions, opportunities and future of the Data Centre market.

India's progress towards becoming a true digital economy, backed by progressive government policies, is encouraging domestic and global data centre operators to make huge investments in the country in a bid to expand their footprint.

India is currently home to over 80 third-party data centers, and is witnessing investment from both local and international players that is expected to touch $4.6 billion per annum by 2025, according to a February report by Nasscom.

According to Global News Wire, the India data center market is expected to double its capacity in the upcoming years, which is driven by strong digitalization and an increase in cloud adoption. An increase in cloud adoption, data localization, and adoption of new technologies such as 5G and IoT are driving the data center demand in India.

Data market flourishing…

The India data center has been witnessing significant investment from local and global investors, including hyperscale operators, driven by increased digitalization as a result of COVID-19, government initiatives, and the adoption of AI, IoT, and big data.

India witnessed 16 new projects/expansions in 2021, and some major investors in the market include companies like Bharti Airtel, AWS, Colt Data Centre Services, ST Telemedia Global Data Centres India, NTT Global Data Centers, CtrlS, and Yotta Infrastructure, among others.

Hyperscale operators are also showing increasing interest in the India market, with AWS, Google, and Microsoft investing in the country. Google has cloud regions in Maharashtra and Delhi, Microsoft opened its Maharashtra data center in 2021, with another MoU signed with the Government of Telangana. AWS is also setting up a second in Telengana, in addition to the one in Maharashtra.

India is also witnessing investments by several new entrants, such as AdaniConneX, Ascendas India Trust, Equinix, EverYondr, and Digital Realty & Brookfield Infrastructure, among others who are currently building, or have planned, data centers in the coming years.

Indian government is taking various measures towards digitalization of the economy, including the Digital India initiative, classification of data centers as infrastructure assets, and proposing a new data localization law, these factors will drive the data center industry in the country.

India has also set an ambitious target to achieve a capacity of 175 GW of renewable energy by the end of 2022, of which 100 GW will be generated via solar energy. It further plans to expand the generation capacity to 450 GW of renewable energy by 2030 as it aims to reduce its fossil-fuel reliance.

Investments in Data Centres…

Amazon Web Services is investing around $1.6 billion to set up 2 data centers in Hyderabad. The Chandanvelly data center, which is under construction, is expected to be operational by 2022. As the digitalization of India is a priority for the government, there is an incentive scheme of 120 billion to facilitate the installation of data centers. Moreover, the Indian government aims to invest over $1 billion in the next five years as part of a hyperscale data center scheme.

Over the last year, the market garnered investments in over 20 projects. Maharashtra dominated the market, followed by Tamil Nadu, Uttar Pradesh, Telangana, and other states.

The market for IT infrastructure is increasing due to the rising investments in data centers and hyperscale data centers. Cloud, big data, and IoT contribute to data centers and IT infrastructure demand.

The government of India started an initiative to strengthen IoT growth, which includes developing around 95-99 city projects and more than $100 billion investments in the telecommunication sector by 2022.

Views of industry stakeholders

Surajit Chatterjee, Managing Director, Data Center Group India, CapitaLand Investments, adds, “The Indian data centre sector is thriving. The major cities attracting the most foreign investment are Mumbai, and Chennai. Data centre providers are also beginning to see new enterprise demand as companies progress towards multi-cloud architectures. These dynamics have captured the interest of major investment funds and private equity firms seeking alternatives to traditional real estate assets. So, setting up data centre business in India extends CapitaLand's domain strength and capabilities. It allows us to leverage the experience acquired by managing and operating data centres globally. We are looking to set up data centres in Mumbai, Hyderabad, Chennai, Bengaluru and Noida. The new data centre facilities that we would be building will have a large IT load capacity with the capability of supporting high rack density, to cater to the rising demand generated due to a massive corporate need to move operations online and the average individual's increased data consumption.”

Ganesh Kothawade, Sr VP- Distribution Solution, Electrification Business, ABB India, says, “In India, the data centre segment has witnessed great progress with double-digit growth. This is owing to multiple factors including attractive investments from local as well as global players, progressive government policies and an overall increasing need for data processing required to meet the massive digitization adopted by the economy. The evolution of the data centre segment is primarily driven by hyper-scale data centre service providers offering cloud space to enterprises and the edge data centres closer to the user for last-mile computing. We can see a transition with businesses maintaining captive data centres to co-location facilities (rental DC space) driven by better security and cost efficiencies. The growth of edge data centres is expected to pick up with the commercialisation of 5G services in the country.”

Rao Srinivasa, Managing Director, Data Centres, Project Management, Colliers India, is of the view, “There are multiple drivers, which are pushing the demand for the data centre market. The primary driver is government's Draft Data Localisation Policy, which is pushing all the major MNCs and indigenous firms to relocate their data processing and storage to India. Not only the private sector, but there are also quite a handful of national banks as well as government entities, that held some amount of their data outside India. With this policy, there is a big push in the market for data centre space in India. India's federal bank RBI is also walking the talk on data localisation, penalising the errand banking entities that are not following the localisation policies strictly. This is another driver for the rush for data centre space in the market. Growing digitisation is the second driver. COVID has fastened the digitisation process across the country too.”

Siddharth Mishra, Chief of Marketing & Sales – Tubes SBU, Tata Steel, adds on the demand trend, “Increasing digitalisation of economy, adoption of cloud and digital transformation of Indian companies has boosted the demand for data centre services in India. With the recent announcement of the government to award ‘infrastructure status' to data centres, there is a huge opportunity for steel-based construction in these types of structures.”

Karthik Krishnamurthi, Head of Sales and Marketing, Hitachi Energy India, says, “Data centres are estimated to account for two per cent of global electricity consumption and is expected to rise in the coming years with the exponential growth in digitalisation. As data centres consume enormous amounts of energy, enhancing power efficiency becomes critical for data centre sustainability and profitability.

At the capex stage data centres have to build in access to renewable energy and deployment of energy management systems. Today, Hitachi Energy's solutions account for around 15% of the capex of every 1 MW of data centre. At Hitachi Energy, our goal is to provide smart, safe, and sustainable power solutions for data centres; from project feasibility through design and delivery up to operation. The company offers services and solutions for smooth functioning throughout the lifecycle of the data centre – dry type transformers, substation planning and execution, switch gear and communication solutions (such as IEC 61850 Process-Bus communication), with digitalisation embedded at every step.

Let's take the example of Digital Transformer TXpert™: TXpert™ is an open, scalable, manufacturer-agnostic ecosystem for the digitalisation of transformers, designed to drive data-driven intelligence and decision making in the operations and maintenance of transformers. The digital transformer TXpert™ portfolio provides real-time monitoring of vital transformer parameters giving insights into power quality and asset conditions.”

Satpal Singh, CEO, Numeric, adds on the solutions from the company, “Numeric provides cutting-edge power back-up solution which caters and solves multiple challenges of modern data centres and at the same time helps data centre operators to have low TCO and Opex. Our solutions help customers to have complete modular, flexible and configurable approach to its design and build as per the growing business needs. We have recently launched Keor XPE, which is designed for data centres and mission critical applications. Maintaining high uptime is critical to such applications. Keor XPE has the unique feature of hot serviceability which means that the power units can be connected, removed or replaced while the rest of the system continues to feed power and protects the critical load. Another need-based smart solution that we introduced is Keor MOD, a true high-density modular UPS. Each power module in Keor MOD by itself is a complete three-phase UPS with a nominal power of 25 kW in just two rack units.”

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