The Evolution of India’s Data Center Industry: From Regulatory Changes to Global Competitiveness
CXOToday has engaged in an exclusive interview with Mr. Pinkesh Kotecha, Chairman and MD, Ishan Technologies.
- How has the data center industry in India evolved over the past decade?
The Indian Data Center sector has undergone significant changes in both scale and density over the past decade. The value of the India data center market is expected to increase from $4.35 billion in 2021 to $10.09 billion by 2027 at a compound annual growth rate (CAGR) of 15.07% throughout 2022-2027 (Source). This impressive growth is the result of incremental changes in the Indian economy, regulatory framework, and customer needs over the years.
Regulatory changes: The Ministry of Electronics and Information Technology (MEITY) saw potential in the data center industry and developed a strategy for data centers in 2020, elevating them to a higher “infrastructure status” like roadways, rails, and electricity. This policy aims to streamline the approval procedure for data center services
Furthermore, The Ministry of Economy, Industry, Trade and Energy announced that cloud data centers will get SEZ designation and that the government would offer free land, water, and power so businesses could set up with little hassle. Such supportive policies have transformed the Indian data center landscape.
- What are the unique features of Indian data centers?
There are a number of features that make Indian data centers attractive to clients worldwide. Unique combinations of these features are used to achieve specific goals of companies around the world:
Data Localization: India has enforced regulations mandating the storage and processing of sensitive data within its borders, a practice known as data localization. This focus on data localization aims to bolster data security and sovereignty by ensuring that vital information remains within the confines of India.
Edge Data Centers: India is witnessing the rise of edge data centers, which are being established to facilitate edge computing and meet the demands of the expanding IoT ecosystem. These strategically positioned facilities enable rapid data processing with minimal latency and are well-suited for real-time applications due to their proximity to data sources.
Multilingual Support: Due to the diverse linguistic and cultural landscape of India, data centers in the country frequently provide multilingual support. This feature allows businesses to effectively communicate and deliver services in multiple languages, accommodating the needs of their diverse global user base.
Cost-Effective Data Transfer: Leveraging cloud interconnect in India can provide cost-effective data transfer options. This is particularly advantageous for businesses that need to transfer significant volumes of data between their on-premises infrastructure and cloud environments, offering potential cost savings
- How do Indian data centers compete on the global stage?
Indian data centers have a number of key features that allow them to compete with global alternatives. In fact, while well-developed economies like the US will have a data center growth of 10.9% CAGR by 2030 (Source), India is expected to have a growth of 15.07% by 2027 (Source).
Due to the size of the data centers available in India, as well as the prevalence of technical expertise, Indian data centers are an attractive option for many nations around the world.
Ever since the 2019 moratorium imposed by Singaporean data centres construction, India has become a favoured destination for the construction of data centers among APAC countries. Several state governments of India are also promoting the construction of the data centres, creating a lucrative ecosystem for data centers.
Furthermore, the Indian government is taking initiatives to promote the growth of the data center industry. For instance, the government’s Digital India program aims to provide high-speed internet connectivity to all citizens, which is expected to drive demand for data centers. Companies are encouraged to meet the data localisation laws and the Reserve Bank of India has also rolled out a set of guidelines on the storage of payment system data, which stipulates that the data related to payment systems must be stored in India only.
With state of art data center coming up in India with technological advancements and innovation along with factors such as lower real estate costs, competitive labor rates, and favorable exchange rates make Indian data centers hub global clients.
The demand for data center investments within India is expected to continue to rise in the coming years, driven by factors such as the growth of cloud computing, the rise of e-commerce, and the increasing adoption of digital technologies by businesses.
- What is the future outlook for data centers in India, considering the Digital India initiative?
The Digital India Initiative (DII) continues to drive digital transformation throughout the nation, creating a favorable environment for the growth of various IT and IT-adjacent services including data centers. Within the context of DII, the data center market is expected to benefit in the following ways:
Increased Digital Adoption: The Digital India Initiative seeks to enhance internet accessibility and promote digital literacy throughout the country, resulting in a rise in the number of individuals using online platforms. As this digital adoption expands, there will be a significant increase in the consumption of digital services, leading to a surge in data generation. Consequently, there will be a growing need for data center infrastructure to accommodate the storage, processing, and distribution of digital content and services.
5G and its effect on Edge Computing: The deployment of 5G networks in India is set to revolutionize connectivity by providing enhanced speed and ultra-low latency communication. This advancement will serve as a catalyst for the growth of edge computing, as it enables real-time processing and analysis of data at the network edge. Edge data centers, strategically positioned in close proximity to end-users, will assume a pivotal role in facilitating the seamless operation of real-time applications, Internet of Things (IoT) devices, and cutting-edge technologies like artificial intelligence (AI) and augmented reality (AR).
International Collaboration: The Indian data center market is experiencing a surge in international collaborations and investments, as global cloud service providers, technology firms, and data center operators actively establish their footprint in the country. This influx of international partnerships plays a pivotal role in fostering the expansion and advancement of the market. By encouraging such partnerships, DII is encouraging an ecosystem of heightened expertise and more wide-spread connectivity for the Indian data center market.
- With the Indian data center industry expected to double its capacity by the end of 2024, what challenges do you anticipate in terms of meeting the increasing demand?
Skilled Talent: The operation and management of ever larger data centers necessitate a proficient workforce equipped with expertise in network management, system administration, cybersecurity, and facility management. As such, it is imperative for IT and data center services to invest in upskilling and training practices to ensure that their workforce is capable of managing the heightening demand and scale of these operations.
Scalability: Addressing the escalating demand for data center services involves the rapid scaling up of infrastructure, encompassing the expansion of physical space, computing power, storage capacity, and network connectivity. Balancing seamless scalability with sustained performance and reliability poses a significant challenge.
Power and Environmental Concerns: With the expansion of data centers, there is a corresponding increase in power and cooling demands. Ensuring a dependable and efficient power supply and implementing effective cooling systems to prevent overheating become more intricate as demand surges. Striking a balance between power consumption and environmental sustainability emerges as a critical factor to consider.
- How is the industry addressing these challenges?
To overcome these challenges requires a collaborative approach involving government bodies, data center operators, technology providers, and industry associations. Continued dialogue, knowledge sharing, and proactive engagement with stakeholders will be key to overcoming these challenges and ensuring the sustainable growth of the Indian data center industry. Some of the key areas are
- Infrastructure and Power: Investments in improving infrastructure, including power supply and connectivity, are crucial. Government initiatives, public-private partnerships, and collaborations with utility providers can help ensure a reliable and scalable power infrastructure. Additionally, adopting energy-efficient technologies and renewable energy sources can reduce the environmental impact of data centers.
- Skilled Workforce: Encouraging and investing in educational programs and vocational training focused on data center operations, network engineering, cybersecurity, and related fields can help bridge the skills gap. Collaboration with universities, industry associations, and training institutions can play a vital role in developing a skilled workforce. At Ishan we also provide in-house training programs to upskill our employees.
- Connectivity and Network Infrastructure: Collaborations between data center operators, internet service providers, and telecommunication companies can improve network infrastructure and connectivity. Investments in expanding and upgrading network infrastructure, particularly in underserved areas, can enhance last-mile connectivity and reduce latency. Public-private partnerships can help accelerate the development of connectivity infrastructure.
- Security and Data Privacy: Implementing robust security measures, including firewalls, intrusion detection systems, encryption, and access controls, is crucial. Regular security assessments, vulnerability scanning, and incident response plans should be in place. Compliance with data protection regulations, such as the General Data Protection Regulation (GDPR), is essential for maintaining customer trust. Collaboration with cybersecurity firms and sharing threat intelligence can enhance overall security posture.
