Commercial real estate services and investment giant, CBRE, has put out a report ‘From Bytes to Business: India Data Centre (DC) Market Powering Progress in 2023’.
What the report states is, to put it mildly, stunning. “The Indian DC industry is witnessing a continuous uptrend owing to rapid digitalisation, improving tech infrastructure, and inclusion of advanced technologies such as 5G, Artificial Intelligence (AI), blockchain and cloud computing (and) India’s growing digital infrastructure, increasing technology penetration and proactive regulatory push have made it an attractive destination for DC (data centre) investments,’’ the report says.
According to the report, the data centre business in the country has investment commitments of roughly $22 billion in the first six months of 2023—which equals roughly 60 per cent of what the country received in terms of investment in this sector in the earlier five years.
The prime reason for this spectacular growth is India’s digital infrastructure, phenomenal penetration of technology to the hinterland and a relatively stable matrix. Since 2018, the segment has received investment commitments worth $35 billion, real estate consultancy CBRE said in its report, with most of that coming in this year.
But why this red-hot interest in data centres? Multiple reasons. It is a sunrise industry with huge opportunities. The humongous digitisation that is at the heart of the Government’s mission in delivering services to 1.3 billion people— both federally and in the states- means stacks and stacks of data capacity are required at all times. Couple this with the tearaway growth of online shopping. One has still not added online financial transactions, and financial services to this mix.
Mukesh Ambani who had once described data as the next oil is investing, through Reliance Industries, close to $125 million in partnership with Canada’s Brookfield Infrastructure in creating data centres in the country.
In the last three years, investments in India’s data centre market have topped over $10 billion and it is expected that the present 10 million square feet of real estate under data occupancy will double to 20 million sq. ft in the next 24 months, according to property consulting heavyweight Colliers India.
No surprise when one takes into account the huge data centres that have already been built by the likes of Google, Microsoft and Amazon. Quickly catching up is AdaniConne, a 50:50 joint venture between Adani Enterprises and (ECX) EdgeConneX, which has raised close to $220 million for creating its data centre assets in Noida and Chennai. The company is also setting up dataprocessing hubs in UAE, Singapore, Nepal and Thailand.
According to Anshuman Magazine, Chairman and CEO – India, CBRE, “Increasing population, enhanced use of technology, social media, and online streaming platforms, rising need for data localisation and fast improving digital infrastructure would continue to boost demand for data centres in India.
This, in turn, is likely to result in the country becoming one of the largest DC destinations across APAC over the next decade.”
One other reason for this growth is the sustained lobbying with the Government that companies like Reliance Jio, Bharti Airtel and Paytm have launched to ensure that Indian data stays in the country under all conditions. They have vociferously opposed the Government’s move to allow the transfer of personal data of Indians to “trusted geographies”. So far, they have been winning the battle.
For India, the biggest plus is that in the next five years, DC operators will farm out into the Tier-II and Tier-111 markets primarily driven by financial services companies and OTT streaming platforms which insist increasingly on establishing DC facilities closer to the consumption nodes.
This in turn will help increase and enhance fibre connectivity, guaranteed uninterrupted power supply and superior work on disaster proofing. Infact, Chennai which has a tidy DC presence lost out big time after the floods of 2017 and this week’s flooding will do their reputation no good. Both the AIADMK and the DMK have been abject failures in assessing and planning for disaster management. How much will they be impacted by the latest disaster in Chennai is yet to be assessed. At the moment, though, Mumbai is the big destination with Pune, Hyderabad, Delhi and Chennai being the other cities with a sizeable presence. Together, they will put India online, twenty-four by seven.
