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The pandemic has increased demand for the cloud worldwide, and digital transformation has accelerated across industries. This shift to the cloud has fueled increased investment in hyperscalar data centers. The need for data centers has grown exponentially in proportion to the increase in data consumption and cloud adoption. According to a Nasscom report, investment in the global data center market is expected to reach $200 billion annually by 2025.
Where does India stand?
Data centers have shown impressive expansion in both developed and developing countries, as more and more businesses are willing to invest in new data storage and application facilities. The data center sector in India is witnessing strong growth in the era of digitization. The country is well poised to be a global hub for data centers focused on cloud computing with projected growth of $8 billion by 2026 using technologies such as artificial intelligence, machine learning and analytics, an ASSOCHAM-EI report pointed out. In terms of CAGR during 2019 to 2025, India is expected to grow at 5% or 2X faster than the global, according to a Nasscom report.
India’s IT Ministry plans to offer incentives worth up to Rs. 15,000 crore under the National Data Center Policy Framework. According to the draft policy, the government plans to invest up to Rs. 3 lakh crore in the data center ecosystem over the next five years. The finance minister gave infrastructure status to the data center industry while announcing the budget for 2022-23. This will further accelerate data center expansion in India.
The world’s leading cloud service providers have announced their availability zones in India, especially in cities like Hyderabad, Delhi (NCR), Chennai, Mumbai and Bengaluru as they offer good optical connectivity combined with proximity to users. Amazon Web Services (AVS) is developing a network of three Availability Zones (AZ) in Hyderabad. Microsoft recently acquired land plots in Hyderabad to launch a new data center region. Google has two cloud regions in India — Mumbai and Delhi-NCR. Companies like Iotta Infrastructure, NTT-Netmagic, STT GDC India, Sifi Data Centers, CtrlS and others are building hyperscalar data centers and data center parks in India. Various policies and reforms brought in by the government to turn India into a global data hub have provided the necessary measures to achieve this growth and the coming years may see the entry of more new players.
Key growth drivers:
- Growing demand for data and high bandwidth capacity, especially due to the increase in the number of smartphone users
- Rapid adoption of cloud and digital transformation by Indian companies
- Operational and development cost advantage
- Availability of skilled labor
- Government measures like Digital India initiative, emphasis on self-reliance, classification of data centers as infrastructure assets etc.
Impact on the environment
While data centers fuel India’s digital transformation journey, their environmental impact must also be considered. Data centers can consume a lot of energy if they are not well planned. Using clean energy for data centers is something environmentalists are advocating. Since the Indian data center industry is still developing, the industry is more flexible and can adopt green technologies as it grows. The country can also strengthen its position to become a global hub for green data centers.
The ending
The future of the Indian data center market looks bright. As India’s economy continues to grow and digital technologies become more widely accepted, data centers will play an increasingly important role in supporting the country’s development. With increasing reliance on digital connectivity, demand is likely to grow further due to the imminent introduction of 5G and the increasing use of IoT-connected devices. With the right policies, India has the potential to become a global leader in the development and use of data centers.
(Written by Mr. Shrikant Navelkar, Director, Clover Infotech and the views expressed in this article are his own)
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