By Nikhil Rathi, Founder and CEO, Web Werks
Data centers are thriving across Asia Pacific. Pre-pandemic, the sector was already coming into its own. 2021 is likely to be the year where new markets in APAC will lead the regional growth story.
Singapore has long been considered as the icon for commercial activities, connectivity and access to the APAC region due to the country’s location, political stability and ease of doing business. However, Singapore is inherently limited in its ability to cater to the rising global demand for an industry such as data centers.
That’s where the world of data needs another base, one that provides almost exponential scope for expansion, quality resources, a ready to serve market, and ample global connectivity. In short, India is the promised land for the APAC data center market, and there are plenty of reasons why the country is set to be the next nerve center of APAC data traffic such as:
Geographic location: India is blessed with unmatched geographic advantage which puts it at just a perfect distance from other APAC financial and business hubs such as Singapore, Dubai, Shanghai and even European cities like London. Thus, it offers the jet-setting corporate personnel an ideal point of convergence. The country has coastline stretching over thousands of miles, making it an ideal point for cable landing from the East as well as the West.
Geo-economics: India is the second most populous country in the world and is rapidly advancing economically as well. The pandemic notwithstanding, India’s clout in the region is constantly going to grow. In fact, there is already a paradigm shift from Asia-Pacific to Indo-Pacific underway. In such a scenario, it makes perfect sense to make future focused investments in Indian data center industry.
Ready to serve market: A population of 1.35 billion with hundreds of millions of active internet users make India a huge market ready to be tapped into. The country is witnessing a massive emergence of fast-growing technology driven companies in almost every business verticals. Several unicorns have come up in sectors like education, beauty, retail, e-commerce, healthcare, IT and software, food delivery, groceries, insurance and so on. There are companies in both B2B and B2C segments which are heavy consumers and generators of data. To manage and analyze this massive data volume, businesses are rapidly switching to cloud based data storage. Global leader in cloud services such as Google, Amazon and Microsoft are competing to dominate the cloud market in the region. With the imminent arrival of 5G, the network speeds will also greatly improve, and India is the perfect place to be for the data centers in APAC.
Government regulations: The Government of India has made it mandatory to store crucial data within the geographical limits of the country. This has significantly scaled up demand for domestic data centers. The country has ample land and connectivity, and several major metro cities such as Mumbai, Bengaluru, Chennai, Hyderabad, Delhi/NCR etc are seeing rapid scaling of data center infrastructure.
Growth of Indian Data Center Market and Investments
Apart from these geo-political and demographical dividends, Indian data center market is also growing faster than ever in the post-pandemic world due to exponential growth of digital economy.
Therefore it is natural that this demand is going to lead to a massive build-up of data center infrastructure to meet the demand. Growing at a CAGR of 21%, the market is expected to reach 1,078 MW by 2025. Mumbai with addition of 360 MW, and Chennai with 134 MW are set to be the two biggest contributors of this growth. Several cable landing stations or submarine cables are also going to be added to the infrastructure in the years ahead.
Mumbai’s role in Indian DC industry
Mumbai has been the core of Indian data center industry, right from its early days. The city has led India’s global economic positioning and has played an instrumental role in presenting India as a lucrative investment destination. Mumbai Metropolitan Region (MMR) including areas such as Navi Mumbai and Chandivali accounts for 42% of all installed capacity in India. The city has unbeatable advantages such as uninterrupted power supply, global connectivity, submarine cable landing stations, talent availability and heavy concentration of leading names in the BFSI sectors.
The Road Ahead
India has a huge untapped potential as a market, but, the country doesn’t yet have the infrastructure required to cater to its 688 million internet users. The country has comparatively low entry barriers in renewable energy especially solar power which makes the country an ideal location for sustainably powered data centers. Further, the data sovereignty laws passed by the Government of India mandate all domestic and international companies to store certain data types within the country’s geographical limits which is bound to drive the demand for data centers and investments in the industry. Despite the surge in demand, the existing data center infrastructure in India is inadequate to fulfill the demand efficiently.