New Delhi: India is witnessing a surge in demand for data centres, as rapid digitisation and new technologies create a need for storing and processing massive amounts of digital data. To tap into this opportunity, several Indian states have rolled out dedicated policies and financial incentives to attract data centre operators and investors.
According to industry estimates, India will require a six-fold increase in data centre capacity by 2029 — to over 5,000 MW from about 1,000 MW in 2023 — involving an investment of Rs 1.5 lakh crore.
While Maharashtra, Telangana and Tamil Nadu were the first movers to release state-specific incentives for the industry, Uttar Pradesh is catching up fast as Noida and Greater Noida are becoming a hotspot for data centres — especially as service providers look to cater to the demand of customers in north India.
A data centre (DC) is a facility that contains IT systems, such as servers and network equipment, which facilitates the storage of a company’s digital data.
According to a report by commercial real estate services and investment firm CBRE, India’s DC capacity doubled between 2020 and 2023 to reach 880 MW spanning over 13 million sq. ft. as of H1 2023 (the first half of a financial year) and was expected to touch 1,048 MW by the end of 2023.
Meanwhile, rating agency ICRA in October 2023 said that with Indian corporates, foreign investors and the existing DC players starting to invest massively in Indian DCs, it expects that overall, 5,100-5,200 MW of capacity involving investments of Rs 1.60 lakh crore are likely to be added in the next six years.
“A DC is closely interrelated to the use of the internet…all of us are using the internet all the time, whether on mobiles or laptops or smart televisions… everything is ultimately coming from some data centre because that is where all those websites and applications that we are accessing are running,” Sunil Gupta, co-founder, CEO and MD, of Yotta, a provider of data centre solutions, told ThePrint.
He explained that given the size, scale and complexity of handling the data storage and processing requirements, most organisations are now moving away from captive data centres — storing the data within their office premises — to third-party data centres.
Improvements in technology infrastructure and the introduction of newer and more advanced tech, such as 5G and artificial intelligence (AI), are further fuelling this demand, he added.
Hotspot for data centres
Data centres today are concentrated largely in a few top cities in the country.
As of June 2023, Mumbai, Chennai, Bengaluru, and Delhi-NCR accounted for about 87 percent of the country’s DC stock, according to a December 2023 CBRE report.
While Mumbai continues to be the most prominent DC market in the country — accounting for more than half of the total stock (52 percent) — Chennai has also emerged as an important tier 1-DC market in India, accounting for 15 percent of the total stock in the top seven cities. Bengaluru and Delhi-NCR each contributed 10 percent to the country’s DC stock, the report added.
Mumbai is expected to continue accounting for a lion’s share of the DC stock because of the presence of multiple cable landing stations and inclusive government initiatives.
Well-rooted entertainment and finance industries also work in the city’s favour, according to CBRE, as the city is seen as the top destination for banking, financial services and insurance (BFSI), media, cloud, hyperscale (large cloud service providers) and OTT companies to locate their DC operations.
However, the National Capital Region is seeing very strong growth, driven by Noida and Greater Noida, due to factors such as availability of land, proximity to the national capital, attractive policies and on-ground government support.
In November 2022, Uttar Pradesh Chief Minister Yogi Adityanath reportedly said that the state had achieved the target of installing 250 MW of storage capacity with an investment of Rs 20,000 crore within a year of launching its data centre policy.
Last year, the state also revised its data centre policy to give more perks to service providers to push for more data centres in the state.
According to Yotta’s Gupta, enterprises like to host their content as close to the users as possible as it helps in enhancing the end-user experience.
“You can’t really serve the needs of all the users across the country only from Mumbai because the latency element (the delay that happens between when a user takes an action on a network or web application and when they get a response) will come in, and the website owner will always want their content to be closest to the users so that the browsing experience, etc., becomes very, very good,” he added.
Additionally, organisations, he said, cannot put all eggs in a single basket. “Hence, companies decided to expand to other cities, such as Bengaluru, Hyderabad, Chennai and Delhi, in addition to Mumbai.”
Why Delhi-NCR is a preferred location for data centres
Vimal Kaw, senior director, products and services, NTT Global Data Centers and Cloud Infrastructure, India, said that, if one looks at what are the growth drivers for data centres in India today, one would understand why the NCR was also growing.
“Right now, the biggest capacity being injected into the market is from the hyperscale side. Second is the BFSI sector, which is injecting capacity. And the third is digital India… data is growing everywhere,” Kaw told ThePrint, adding that one of the hyperscalers decided to come to this region.
Hence, the region started to see growth and “it will not stop. It is just a matter of time until another hyperscaler will also inject capacity. You will see NCR growing at a much higher pace,” he highlighted.
NTT currently operates 18 data centres across 13 campuses in India. These are present in Delhi-NCR, Mumbai, Chennai, Bengaluru and an upcoming one in Kolkata.
In January, it announced the launch of its new data centre campus in Noida that will house two data centres spanning six acres and will be able to support a planned capacity of 52.8 MW critical IT load.
Kaw stressed that this growth in the NCR is just the beginning. “The government also has been helpful in those policies that they are introducing, which are recognising us as an industry. This is a favourable position for investors, for data centre providers and the customer as well,” he said.
Encouraged by the response so far with interests from players such as Yotta, Adani Group and Microsoft, the UP government has reportedly announced that it will offer 10 more land parcels, together measuring 50 acres, for more data centre projects in the Noida-Yamuna Expressway region.
Yotta’s Gupta added that since over 30 percent of the population of the country resides in north India, operators cannot afford not to have a data centre in such a big region.
“So far, all the north of India was being served from Mumbai. We also had so many of the popular websites hosted from our data centre in Mumbai. But operators also realised that they need to be closer to their customers and also the Government of India is now a much bigger digital consumer compared to even the private sector,” he said.
Moreover, he explained that cloud service providers prefer to have three data centres, preferably within a 15-20 km radius, which makes Noida-Greater Noida a good combination.
“For data centres, you need multiple locations, land availability, road access to locations for fuel trucks in the case of emergency, power availability …there are a lot of site selection criteria in which Delhi and Gurgaon could not fit in,” Gupta said.
Yotta Infrastructure unveiled north India’s first hyperscale data centre, Yotta D1, in October last year in Greater Noida. Spread across 20 acres, the Data Center Park will offer a total capacity of 30,000 racks, four dedicated fibre paths and an IT power capacity of 160 MW.
The centre is a highly secure setup with nearly 600 cameras being monitored from a control room. Some of these are long-range cameras, which can be zoomed up to 4.5km around the campus.
The huge campus currently doesn’t have much civilisation in its vicinity, and there are at least six layers of physical security, including physical checks, access cards and biometrics, to reach the server room, for anyone wanting to visit the centre.
While one data centre on the campus is up and running, the construction of the second one is underway. The company has also built a co-working space and a few hotel-like rooms for its employees and customers who would like to work from the campus or may need to stay a couple of nights.
Gupta highlighted that Greater Noida is a planned city and so much land is still available with planned roads and power infrastructure.
“The government is going out of the way to support data centre operators. I know for my campus, I took 20 acres of land and typically it would have been a 30-36 months project, but with huge support from the government in terms of approvals and everything that we wanted… we were able to launch this huge campus with lots of capacity in less than 18 months,” he said.
Gupta added that, besides giving incentives such as subsidies in stamp duties or zero electricity duty, the government officials were actually on the ground working with them to give the power infra or fibre ducts or whatever one needs to ensure the data centre ecosystem grows in the region.
“…And they are not doing it only for me. They are making such efforts for everyone coming in,” he added.
Gupta said that UP’s data centre policy is one of the most attractive. “Not only are they (government) giving fiscal incentives, but also there are non-fiscal benefits. For example, UP modified building codes to accommodate the requirements for DC.:
He emphasised that the growth in UP is not just because of policy, but the “genuine on-ground support right from the CM’s office to the top bureaucrats… the principal secretary to the people on the ground in Greater Noida Industrial Development Authority (GNIDA)…So instead of the typical image in a government of being a bottleneck, they are rather supporting us.”
Also Read: India’s rapid digitisation has one major casualty—cybersecurity
Impact of climate conditions and more
But would the extremely hot climate in Delhi-NCR have an impact on data centre operations, which need a controlled temperature environment to operate? According to Kaw, they will have data centres wherever customers want them to be.
“If there is demand in NCR, that means we have to make a data centre there. The environment in Delhi is different as compared to Mumbai. We see extreme conditions of weather in Delhi. So what we do is we design our data centre in such a way…the selection of the mechanical, electrical and plumbing equipment is done accordingly,” he said.
Gupta said that, while the difference between the temperature outside and what’s ideal for a server hall is a critical criterion for site selection, there are other factors too. For example, the availability of fibre.
“A data centre will host hundreds and thousands of websites and applications and services. The businesses will run from the DC. So fibre capacity and the fibre redundancy has to be extremely huge…in my data centre, too, we have fibres from multiple telecom operators coming from different paths so that even in a case of emergency, services continue to run,” he explained.
This, he said, is currently possible in some very large metros. Hence, DC operators are currently not even in tier-2 cities or cooler places, such as Himachal Pradesh or Leh.
To maintain the required temperature within the server halls, DCs put up huge chillers. For example, Yotta’s data centre in Noida has 23 chillers for one operational building, and the temperature in the server rooms is monitored via multiple sensors.
The coming up of Noida-Greater Noida as the data centre hub will also benefit the state economy as the DC ecosystem can help attract industries, such as fintech, to these cities.
“…when you are into these services that support AI models and delivering Cloud… they are highly people-oriented services. So in our case, a lot of direct jobs are also created. But data centres also generate a lot of indirect deployment. During construction phases, for example, I have seen 1,200 to 1,500 people working on my campus for two years…and in data centres, construction is an ongoing thing,” Gupta said.
He added that once the DC ecosystem is in place, by default, supporting ecosystems, such as AI, cloud computing or fintech, will start growing, which will ultimately lead to employment generation. “The state also gets revenues, such as power tariffs and taxes.”
On the employment generated, Kaw added, “During construction, we have more than 800 people per day and it takes us 18 to 24 months to construct. When you are operating a data centre building…we have limited people there but we do generate employment of 100-150 people per data centre”.
This is an updated version of the report.
(Edited by Richa Mishra)
Also Read: ‘The new oil’: Now home to India’s biggest data centre, UP aims to be a hub for surging industry