There has been an increased investment from global players.

- Surajit Chatterjee

Managing Director, Data Center Group India, CapitaLand Investments

How is the data centre segment evolving in the country?

The data centre sector in India is witnessing tremendous growth. India has all the requisites in place to be a major data centre hub. Our country has a distinct cost advantage, high availability of skilled labour and strong data protection laws. The country has attracted investment from large global data centre operators, cloud service providers, hyperscalers, private equity investors and developers.

All the major states in India have begun to understand the importance of technology and the critical need for a robust digital backbone; they have started rolling out state wise data centre policies to facilitate the setting up of data centre infrastructures in their respective states. The Central Government has also acknowledged this fact, and in the recent budget, it granted the sector 'infrastructure status'. With this, the data centre industry will attract more investments, and it has set the path for a multifold growth trajectory.

What are the major demand drivers of data center market in India?

This data centre demand is being driven by shift from on-premise to co-location and cloudification, data privacy laws and rapid digitisation. Major cloud players like Google, Microsoft and AWS continue to expand their cloud footprint into the Indian market and spur data centre growth. E-commerce and digitisation of financial services, and the increase in OTT platforms also play a significant role in the demand for data centres.

Some other major factors that will drive the demand are:

• Improved network connectivity and availability of landing stations offer a better global latency.
• 5G deployment will increase the edge data centre investments, pushing the adoption of IoT-enabled products in the Indian market.
• Rise in investment from global co-location providers.
• Large enterprises have been struggling to upgrade their IT infrastructure to address increased digital usage; therefore, they lean back on data centre providers.
• Data centres are connected to DECIX, National Internet Exchange (NIXI), and Extreme Internet Exchange (Extreme IX), reducing the latency PAN India.

How is the government's digitalisation policy driving the demand for more data center facilities in the country?

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.

How are sustainable solutions making an important presence in data centre facilities?

As enterprises are increasingly looking towards achieving 'net-zero' emission targets, data centres are playing their part to ensure enterprises accomplish these goals. 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. Data centres are increasingly adopting sustainable practices and moving to renewable energy sources. The onus to keep the world connected 24/7 with minimal impact on the environment lies in responsible operations of data centres - this is a challenging aspect that requires continuous innovation.

Currently, India's renewable energy capacity is around 150 GW, and various estimates peg this to be about 30 per cent of the total installed power capacity. This 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 responsibly, delivering long-term economic value, and contributing to our communities' environmental and social well-being.

What kind of opportunities do you visualize for global players and technologies in the Indian data center market?

At present, the data centre industry is growing in cities such as Mumbai, Hyderabad, Chennai, Bangalore and NCR. India is all set to become a data centre hub owing to the availability of high network bandwidth, lower power tariffs and the presence of hyper scalers. Additionally, the availability of state-of-the-art infrastructure is likely to fuel the growth of India's data centre market.

New business models are emerging in this business, including managed co-location services, pay-per-use utility model, build to suit, etc. Location and design, easy scalability, security, infrastructure, sustainable practices and reliable partner are the key determinants for data centre demand.

Currently, in India, captive data centres still have the highest market share; however, co-location service model is recently witnessing growth and is soon expected to be almost equal to captive. This provides data centre operators scope to support local enterprises in their digital transformation journey and ensure they remain competitive.

How do you look at the future of data center market in India? What are your plans for this sector in India?

Data is the new oil. According to Savills India's report real estate demand for data centre is set to increase by around 15-18 million sq ft across the major metros in the next 3-4 years, and according to NASSCOM, cloud spending in India is estimated to grow at a CAGR of 30% to reach $7.1 billion in 2022. These clearly indicate the positive trend for data centres in India. Therefore, there has been an increased investment from global players.

We believe that CapitaLand has entered India at just the right time from a data centre business perspective. We have done our due diligence and chalked out a strategic roadmap for India. Over the next few years, you will see substantial investment from the group to fulfill its vision: To be a leading data centre organisation in India that empowers customers through high-quality products and services. Our data centre solutions will be built on four fundamental pillars, i.e., "SAFE - Security, Automation, Flexibility and Efficiency."

Other factors that give CapitaLand an edge over the competition include the fact that it is in the data centre business globally for the long run. Data centre business is an extremely capital-intensive one and payback periods are long and our advantage is that we are backed by a highly profitable group and have global expertise in (data center) operational capabilities.

Also, CapitaLand India's greenfield state-of-the-art data centres will be in prime locations (Availability Zones) across the states, with superior build quality with the right certifications and world-class customer experience for clients. We have a very long term investment vision for growth.

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