Data centres to attract Rs 1.5 lakh cr in investments in 6 years for India

Data centres to attract Rs 1.5 lakh cr in investments in 6 years for India

The investments will be further aided by favourable regulatory policies like the draft Digital Data Protection Bill.

PTIUpdated: Tuesday, February 21, 2023, 10:04 PM IST
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The data centres industry will witness investments of Rs 1.5 lakh crore over the next six years, a report said on Tuesday. This will result in addition of nearly 5,000 MW capacity, which is a six-fold increase as compared to the current installed capacity, domestic ratings agency Icra said in the report.

The agency attributed the increased interest in investments to data localisation and data explosion for what it termed as the data centre revolution, which is underway in the country.

It can be noted that last few years have seen a slew of announcements by companies, including those from the Adani Group, to invest in the data centres space.

"The key triggers for digital explosion in India are the increasing internet and mobile penetration, the government's thrust on e-governance/digital India, adoption of new technologies (cloud computing, Internet of Things, 5G etc), growing userbase for social media, gaming, e-commerce and OTT platforms," the agency's co-group head for corporate sector ratings Anupama Reddy said.

The investments will be further aided by favourable regulatory policies like the draft Digital Data Protection Bill which provides infrastructure status to data centres, special incentives from the Central and state governments like land at subsidised cost, power subsidies, exemptions on stamp duty, discounts on usage of renewable energy and procurement of IT components made locally, Reddy added.

Mumbai, Hyderabad and national capital region (NCR) to account for 70-75 per cent of the installed data centre capacity, she added.

"The presence of landing stations, fibre connectivity, uninterrupted power supply, proximity to tenant's headquarters and high score on disaster proofing are some of the key parameters a data centre operator would look for in a location," she said.

The data centre industry's revenues are expected to increase at a compounded annual growth rate of 17-19 per cent between FY23-FY25 as against 24.5 per cent during FY18-FY22, the agency said.

With an increase in revenues and better absorption of fixed costs, operating margins are likely to improve and remain in the range of 43-45 per cent during the next three years, it added.

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