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Data Centres Drive Strong India Investment Growth
Data Centres Drive Strong India Investment Growth
Context: India’s data centres expansion has gained renewed significance after Google announced a $15-billion AI data centre in Andhra Pradesh, pushing the total committed investments in the sector toward $50 billion over the next 5–7 years.
Why is there a huge demand for Data Centre ?
- Rising Data Consumption and Digital Penetration: India is witnessing exponential growth in internet and mobile usage—driven by UPI, e-commerce, OTT platforms, EVs, and AI-based services.
- As per TRAI and MeitY estimates, India contributes ~20% of global data generated, but has only ~3% of global data centre capacity, creating a structural demand-supply gap.
- Data Localisation and AI Push: Mandatory data storage under the Digital Personal Data Protection Act, 2023 and sectoral norms (RBI, IRDAI) have increased the need for domestic storage infrastructure.
- AI-driven applications like ChatGPT, with India being the second-largest user base, require high-computer facilities, raising demand for hyperscale centres.
- Strategic and Economic Drivers: The government granting infrastructure status (2022) has facilitated access to long-term credit and FDI.
- According to Crisil, capacity is expected to rise 5x to 8 GW by 2030, requiring investments of ~$30–50 billion, supported by states like Maharashtra, Tamil Nadu, and Uttar Pradesh through dedicated DC parks.
What is the draft National Data Centre Policy?
- A Performance-Based Investment Framework (MeitY, 2024/25 Draft): The draft policy proposes a unified national approach to streamline clearances, enhance energy efficiency, and attract global hyperscalers. It aims to create world-class digital infrastructure aligned with India’s growing digital economy, projected to reach $1 trillion by 2030 (Economic Survey 2023–24).
- Tax and Regulatory Incentives: It suggests conditional tax exemptions for up to 20 years, input tax credits on GST for capital goods such as HVAC and IT hardware, and permanent establishment (PE) status for large foreign data centres firms (100 MW+ capacity).
What are the crucial objectives laid in Data Centres policy?
- Expanding Capacity and Standardisation: To harmonise diverse state-level data centre policies under a single national framework and expand India’s capacity in a planned, energy-efficient manner.
- Improving Ease of Doing Business: Provision of single-window clearance, dedicated DC zones, faster land allotment, and simplified procurement norms to reduce project delays—a major bottleneck noted by NITI Aayog.
- Sustainability and Resource Efficiency: Ensures green data centres through renewable energy use, water-efficient cooling technologies, and lower PUE (Power Usage Effectiveness). This is crucial as 85% of data centres lie in high water-stress zones (World Bank, 2023).
- Enhancing India’s Role as a Global Digital Hub: Aims to position India as an Asia-Pacific cloud and storage hub, leveraging projects like Google’s $15 billion AI data centres in Andhra Pradesh, reflecting investor confidence.
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The Source’s Authority and Ownership of the Article is Claimed By THE STUDY IAS BY MANIKANT SINGH
