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Cos make a beeline for data centre biz

After RBI made it mandatory for service providers to store data locally, many players have started investing in this segment; Infrastructure status to data centre will facilitate flow of easy credit at lower cost apart from tax incentives

Cos make a beeline for data centre biz
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Cos make a beeline for data centre biz

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Data Protection Bill

- Ind-Ra forecasts investment may grow to 72,000 cr in next 5 yrs

- Some large corporates already ventured into this space

- Adani Group set up a new data centre in Mumbai

- Other firms CtrlS, Reliance, AWS, We Werks, NTT, NPCI entered the segment

- Data Protection Bill may make it mandatory for service providers to store domestic data in Indian soil

Bengaluru: Data centres in India are likely to get a major boost with many domestic players entering this business segment in coming days as the budget proposes to give infrastructure status to data centres.

According to experts, apart from global majors like Google and Microsoft, many domestic companies will benefit from these proposed tax incentives.

"Giving infrastructure status to data centres will boost investment in this segment. We have already seen big players investing aggressively. This announcement will see many small domestic players also raising their investment plans," said Pareekh Jain, an IT outsourcing advisor & founder, Pareekh Consulting.

According to rating agency India Ratings, total investment in the data centre industry in India is likely to touch Rs70,000 -72,000 crore over the next five to 10 years. Going by the historical trend, between 40-50 per cent of the total investment was funded by debt with average tenure between 3-7 years, it said.

After the budgetary announcement, some large corporates have already shown their intent to scale up their investments in this sector.

For instance, the Adani group has incorporated a new data centre subsidiary in Mumbai as it looks to build a network of hyperscale data centres in India. The subsidiary, Mumbai Data Center Ltd, was established by AdaniConnex Pvt Ltd, a joint venture of the company with EdgeConnex Europe BV, the company said in an exchange filing. The company is eyeing hyperscale data centres in six Indian cities -Chennai, Navi Mumbai, Noida-Delhi, Vizag, and Hyderabad. Other major players including CtrlS, Reliance, Amazon Web Services (AWS), We Werks, NTT, NPCI (National Payment Corporation of India), ESDS, Google, Net4India, Yotta Infrastructure owned by Hiranandani Group have already set up data centres or have plans to do so in the near future.

The infrastructure status to data centre, which will facilitate the flow of easy credit facilities at lower cost apart from tax incentives, is likely to give further impetus to their investment plans.

After the Reserve Bank of India (RBI) made it compulsory for service providers to store data locally, many players have started investing in this segment since. Currently, Indian lawmakers are at final stages of coming up with legislation regarding data privacy and protection. The Data Protection Bill is likely to make it mandatory for service providers to store domestic data in Indian soil in line with many such legislations across the world. Once the bill is passed, there will be massive demand for data centre for storage and safe upkeep of the local data.

Moreover, as internet users' base rises with India readying to roll out 5G network, there is a likelihood of data explosion is coming years that will increase demand for data centres in coming years.

Debasis Mohapatra
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