Why India’s New Bill Marks a Promising Start for fulfilling the three tall aspirations of the Data Center Industry

By Nikhil Rathi, CEO & Founder, Web Werks|Iron Mountain Data Centers

With India tweaking how we store data; the local DC ecosystem may seem like a hotbed for next-level growth. Here’s why and how.
With its simple language and easy-to-interpret illustration, India’s recently announced data privacy law has already captured the interest of commoners and businesses alike. The bill places significant checks and balances upon entities such as data custodians, fiduciaries, and also consumer-specific areas. The bill certainly meets the consumer’s data privacy needs who unfortunately had little say in how personal data was used, re-used, analyzed, and even abused. To enterprises, the cost-benefit is immense given reasonable compliance requirements.

India’s latest data bill is a step in the right direction for the data center industry comprising a wide ecosystem of hardware, software, and service providers. In an era where data is more commonly equated with oil, the opportunities in the data center front are widening in India. The policy is encouraging and compliments an announcement made last year when data center and energy storage systems got infrastructure status.

Enabling Data Residency

India’s diverse and vast BFSI ecosystem got a taste of the regulator’s urgency toward data residency sometime in 2018. The Reserve Bank announced a nuanced report directing payment firms to localize consumer-facing datasets within the country. Although the volume of this banking data may be unavailable, it is gargantuan given the sheer population size, volume, velocity, and variety of data.
The global data market according to IDC is expected to double to 181 ZB by 2025. The need to localize data is not only owing to the fear of unexpected consequences but also to provide faster services through edge computing. Additionally, economies across the world have promulgated laws that blend risk management and faster access. Germany, Britain, the United States, China, and Europe (GDPR) have promulgated laws to protect their citizens’ data from unauthorized access or analysis.
Data residency may have become a thorny issue accentuated by a spurt in data breaches. Such incidents dent not only the brand value but overall customer confidence in the digital ecosystem. A data protection policy is therefore a proactive measure adopted by Indian policy-makers. This may explain the need to localize everything from social media to location data of apps used by its citizens.

Host in India
Localizing a large data resource may initially seem like an unreasonable task, but it offers immense business value. Believe it or not, investing in and maintaining a data center is a huge economic advantage. As of 2023, $222 billion was invested in data centers across the world. Although the US is home to over 30% of global data centers, China accounts for two of the world’s massive facilities – an area of 10.7 million and 7 million sq. feet. Singapore features third on the list. India features thirteenth with nearly 140 data centers.
With the spurt in data and movement towards digital everything, India has two tall opportunities for local data centers. These local data centers could provide faster access to citizens and help avert the risky proposition of hosting it elsewhere. Secondly, the likelihood of emerging as a data center hub.

There’s a significant lesson from Singapore which features as the world’s top-five destinations for a data center business. Singapore’s flourishing data center business got disrupted in 2018 owing to environmental concerns. The local industry failed to innovate on challenges such as energy consumption, high humidity, and high temperature. Singapore could account for 60% of Southeast Asia’s data center capacity, but these facilities also accounted for 7% of electricity consumption.

A climate scare prompted the Singapore government to announce a three-year moratorium on new data centers which ended in early 2023. India has a terrific advantage thanks to the availability of skilled manpower, availability of resources, and varied topography. Recent innovations in the areas of renewable and sustainable energy could promote prominent cities such as Mumbai, Noida, Hyderabad, Chennai, and Bengaluru as new data center destinations in the world.

Eco-system opportunities
Deploying sustainable data centers can infuse opportunities to the local and allied sub-sectors. A 2023 McKinsey report outlines some positives – a 10% increase in consumption of data centers in the US; a proportionate increase in co-location and data center spending; and growth of sustainable and efficient cooling systems within data centers gaining crucial interest for investors.

Arizton Advisory & Intelligence predicts India’s data center market to double to $10 billion by 2027. Such growth is expected to push allied sectors such as real estate. A report by Cushman & Wakefield highlighted interest in secondary and emerging markets for hyperscale and colocation providers. The interest is understandable from an analysis of Anarock-Binswanger report that has indicated the addition of 45 new data centers or 1,015 MW of capacity being added up to 2025.

Localized hosting is a game-changer to enterprises given the practical applications of edge-in areas around IoT, predictive analytics, newer telecom uses, and virtual reality. Edge computing reduces latency, and improves real-time processing capabilities but needs data centers strategically located across the country. An ICRA ratings report estimates an investment of Rs 1.5 lakh crores in the short term. Such an investment will present deliver rich enterprise purpose, and help unlock collaboration and foster new business ideas.

Since data centers empower information access, India’s economy could set fresh milestones in financial inclusion, entrepreneurship, and other social programs. India’s data center business can experience substantial growth by investing in modern and energy-efficient infrastructure, fostering a supportive regulatory environment, integrating renewable energy sources, and ensuring high-speed connectivity. Encouraging cloud adoption, creating interconnectivity hubs, and leveraging edge computing could fuel demand while collaborations could contribute to a thriving data center ecosystem in India.