By Shubhra Tandon

The development of data centres in India is likely to get a fillip with the government proposing to give it infrastructure status. Investors and operators of this asset class have welcomed this, as it will give them access to cheaper and a wider pool capital over the long-term basis. With the exponential growth in data consumption since the start of the Covid-19 pandemic in 2020, India has seen investments of $1 billion in data centres in India as on June 2021 and $4-5 billion investments are anticipated over the next two years, according to a recent recent report by real estate consultant JLL.

Reliance Industries, Adani Group and Airtel are some of the corporates to have announced major investment plans for the segment. According to reports, Reliance Jio is planning a 200-MW data centre campus with $950-million investment outlay in Delhi-NCR. In 2019, the Adani Group had announced a 70,000-crore investment in this asset class, while the Hiranandani Group under Yotta Infrastructure had plans of investing about15,000 crore by 2026. Private equity majors — Ascendas, Brookfield and Everstone — have also announced multi-million dollar investments in data centres in India over the last two years.

Rajesh Tapadia, CEO, Nxtra by Airtel — a subsidiary of Bharti Airtel told FE that the government’s move will help strengthen India’s position as a regional data centre hub. “India has one of the lowest per capita data centre capacities. This was largely due to limited long-term financing options and lead time required for availing all regulatory clearances. With the infrastructure status, this should be resolved to a large extent. The central and several state governments are also aiming to bring in single window clearances to support the industry,” Tapadia said.

Nxtra by Airtel currently operates a network of 11 large and 120 edge data centres. He said the company has committed to invest 5,000 crore by 2025 to triple its capacity to 400MW. “As part of this investment we will be creating seven Hyperscale Data Centre parks across major metro cities in India,” Tapadia said. He added that the company is also aggressively scaling up the use of green energy in the data centres and aims to reach 50% of the power requirements of these centres through renewable sources in the next 12 months. “We have already commissioned three captive solar power units across Uttar Pradesh and Maharashtra with installed capacity of 49 MW,” he said. Sanjeev Dasgupta, CEO, Ascendas India Trust, said that the budget indicates the progressive outlook for India’s digital economy and is a positive for data centres. He said, “The more direct benefit for us would be the ease and accessibility of financing for data centres and renewable energy systems — from both a domestic and foreign perspective. Therefore, the cost at which debt can be availed should also become lower and cheaper.” Ascendas has already announced an estimated1,200 crore (S$216.6 million) on its first data centre campus in Navi Mumbai. The fund has planned a total investment of `2,400 crore, which includes both the real estate plus all the machinery in that data centre. In addition to Mumbai, it is also focussing on Hyderabad, Chennai, Bengaluru and NCR for data centres.

It is estimated that 508 MW of supply will hit the market by end of 2023, taking the total IT load capacity to 1007 MW. Till June 2021, there was 51.8 MW of supply addition in data centres, while the absorption equalled 90% of this addition at 46.4 MW. The absorption was 45.5% of the 2020 levels.

According to Rachit Mohan, head (data centre advisory), JLL India though the infrastructure status is an enabler in further capacity addition, other announcements like 5G roll out and re-emphasising fibre optic roll out across the country, will have a higher impact as it will increase data and content consumptions sharply.

Niranjan Hiranandani, managing director, Hiranandani Group, said, “It is a shot in the arm, as it will enable availing long term and cheap credit, bolster data localisation in wake of protection of data sovereignty in the age of globalisation. This progressive step will enable India to become a global data centre hub, one which will get a boost due to favourable geographical location and availability of skilled resources.”

(The author’s views are personal.)