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‘The new oil’: Now home to India’s biggest data centre, UP aims to be a hub for surging industry

Hiranandani Group's Yotta Infrastructure Monday inaugurated the centre, 1st of 3 expected to come up in UP. Yotta will also be investing Rs 39,000 cr in the state over next 5-7 yrs.

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New Delhi: The Uttar Pradesh government Monday entered into an agreement with Yotta Infrastructures that has built a data centre in Greater Noida — one of the largest in the country and the first one in north India. Amid concerns of data centres being harmful to the environment, the CEO of Yotta, Sunil Gupta, has claimed that this centre is ‘sustainable’ and runs on ‘green energy’.

Yotta, the data centre business of Hiranandani Group, inaugurated the centre after entering into a Memorandum of Understanding (MoU) with the Uttar Pradesh government under which the company would invest Rs 39,000 crore, in a phased manner over the next five to seven years, in the state’s data centre industry.

A data centre is a physical storage facility that houses critical applications and data. However, since running one is resource intensive, investments remained concentrated in Maharashtra due to incentives provided by the state. But now UP is throwing its hat in the ring.

There are close to 161 data centres in India, including in smaller cities such as Alwar in Rajasthan, Alappuzha in Kerala, and Amravati in Maharashtra.

A combination of subdued supply in the past and new government rules has led to a renewed surge in demand for data centres. During the pandemic, severe supply chain disruptions meant that companies were unable to conduct their research and procure equipment to build storage structures that could process large amounts of data.

However, now that the central government has repeatedly reiterated its need to access, process and store data within its boundaries, companies are revisiting their plans to set up data centres in the country.

UP is looking to get a jump on this demand and emerge as a data centre hub.

“Uttar Pradesh’s proximity to key business hubs in the northern region gives it an advantageous position for the establishment and growth of the data centre industry,” said Gupta. “The government, too, has been highly supportive and bullish on the sector’s potential with its progressive initiatives to boost this sector through incentives.”

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High energy consumption

Data centres, however, come with a significant downside. Environmentalists and climate change activists in several parts of the world have protested in the past against these centres, claiming that they consume energy in excessive amounts and are not sustainable.

One of the major drawbacks of data centres is that they overheat often and require powerful air conditioners to cool them down, thereby leaving a heavy carbon footprint.

Worldwide, there has been pushback from communities who accused data centre companies of consuming too much power and resources that otherwise could be used during challenging environmental circumstances such as droughts.

“One of the reasons why we have local servers is that they are close to the users of data and hence ensure low latency, which means that there is a high volume of data being processed and transferred with minimal delay,” said Akash Karmakar, a partner with the Panag & Babu Law Offices. He leads the firm’s fintech and regulatory advisory practice.

“Servers processing large data loads require a lot of energy to operate. Consequently, they heat up and consume more energy to cool. Data centres have therefore traditionally been energy intensive,” he added.

However, while speaking to ThePrint, Sunil Gupta, CEO and Co-founder of Yotta infrastructure, claimed that the Yotta Data Centre in Greater Noida is environmentally sustainable as it uses the latest technology to reduce heat.

“Data centres have a large energy footprint, with the cooling system being a major contributor to this consumption,” he explained. “At Yotta D1, during winters, we get free cooling by leveraging the colder temperature outside. During summers, we use a system called ‘adiabatic cooling’ in our chillers using water evaporation to reduce heat.”

Adiabatic cooling is the process of decreasing heat through a change in air pressure caused by volume expansion. The system includes large fans that pull in warm air through water-moistened pads. The movement of air speeds up the evaporation of the water, which cools the air.

In addition, the company claimed that 100 per cent of its energy requirement comes from green sources (solar and wind). The centre is yet to be fully functioning but Gupta explained that its energy will come from third-party green power developers or from solar plants that Yotta has claimed it will set up.

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An emerging hub for data centres

In 2021, the UP government recognised the exponential increase in data consumption and data traffic in India and released a policy that stated the need for data centres. Noida, according to the policy, was an attractive destination for investments in the industry.

The policy laid down targets for the next five years — attracting investments worth Rs 20,000 crore and establishing three private data centre parks. The one inaugurated on Monday is the first of the three. It has a total capacity of 30,000 racks, IT power capabilities of 160 MW and streamlined fibre paths.

Financial subsidies were a crucial offering in the policy, with the government promising an interest subsidy of up to 60 per cent per year of the annual interest for seven years, on a loan of up to Rs 10 crore taken to set up data centres, and a 25 per cent subsidy on prevailing sector rates on the purchase or lease of land.

The tech community is also keeping a hawk’s eye on how 5G infrastructure will shape up in the country. Data centres have a crucial role to play in this aspect as well, Niranjan Hiranandani, managing director of the Hiranandani Group, explained, adding that they will be needed to help the central government’s endeavour to move quickly from 4G to 5G.

“Data itself will be a $1 trillion economy, this is the kind of paradigm we are looking at,” Hiranandani said at a press interaction following the inauguration of the data centre.

“Data is the new oil, a new direction in which we are going to go. When you move quickly from 4G to 5G, the requirement we have will increase thousand-fold. Not only that, the speed at which you will be getting your data is unbelievable,” said Hiranandani

Today, foreign companies lead the race, he added, explaining that 85 per cent of Indian data is in foreign locations at the moment.

“This has to come back to India. This is exactly what we expect to happen in the next couple of years,” he said.

Data localisation laws

Industry leaders have been patiently waiting for the data protection aspects of the larger Digital India Act. The data protection bill will, among other things, define what data and how much of it should be stored locally. Data centre companies, being at the centre of data localisation policies, are looking forward to the laws being enforced.

“As of now, there is no legislation in India that mandates that data must be localised and stored only in India,” Karmakar explained. “However, ‘payment system data’ has been mandated to be stored in India by the RBI. The Data Protection Bill, 2021, which has been withdrawn, contemplated that a class of data called ‘critical personal data’ should be stored only in India. However, the draft law proposed no clear definition.”

Concerns about the data localisation laws have also surfaced, which could eventually impact the growth of data centres in India.

“Data localisation policies run contrary to the free and open nature of the internet as it curbs the free flow of data by requiring the storage and processing of personal data within national boundaries,” Tejasi Panjiar, Associate Policy Counsel at Internet Freedom Foundation, told ThePrint. “This would increase compliance costs which would disincentivise foreign companies from bringing their services and products to India. For Indian companies, this policy would mean that their ability to avail the services of foreign cloud service providers would be restricted.”

(Edited by Theres Sudeep)

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