India witnesses datacenter growth across all cities : CBRE

CBRE South Asia has announced the findings of its market viewpoint titled, ‘India Viewpoint: Is India the next frontier for the Data Center Industry’. According to the CBRE report, Mumbai with 35 Data Centers operators has become the leading location for growth of Data Centers business in India.

Mumbai has led the Data Center business in India as it is one of the global cable landing locations in the country.

Cable landing stations or submarine cables are vital international telecommunication links between countries across the world, making them an essential element in telecommunication services including broadband connectivity. Mumbai presently has four of the ten cable landing stations in the country.

The findings of the report stated that India has seen the growth of DCs across all key cities, including Mumbai, Chennai, Bangalore and Hyderabad. While all cities have strong office markets, Mumbai and Chennai have attracted DC players as they offer cost arbitrage using direct submarine lines/cables. The graph above enumerates the approximate number of data center operators in key cities in India. NCR too is a preferred location for Data Centers as some major corporates are located there.

Anshuman Magazine, Chairman, India and South-East Asia, CBRE says, “India holds massive potential to become the ‘next destination’ for data centers, driven by demand created by businesses. Overall, the DC market outlook looks positive on the back of the availability of land and skilled talent pool along with a huge, untapped market. Moreover, a slew of policy reforms undertaken by the Indian government have generated enthusiasm among overseas investors.Several companies have either amped up their existing DC portfolio or have made plans to do so.”

According to the report, several states have started developing strategies to leverage this growing interest in India. Maharashtra and Telangana were among the quickest states to tap into the growing demand for DCs by coming up with several incentive schemes for the sector. Jharkhand and Chhattisgarh too have formulated policies for the IT–ITeS segment as well as introduced a single-window clearance system to encourage investors.

The viewpoint further identifies that growing economy, rapidly expanding consumer base, increasing domestic & international demand from corporates, presence of skilled workforce&infrastructural development are some factors responsible for promoting India as a potential DC hub. The growing reliance on internet services and advanced technologies for data management have provided further impetus the demand for high-quality DCs.

The widening net of e-commerce in India will further boost the DC segment as the sector increasingly needs help in managing its growing database. Another demand driver will be the Smart City initiative, through which the government is focusing on shaping e-governance across the country.

Abhinav Joshi, Head of Research, CBRE India says, “The growing importance of DCs in business operations can be attributed to advances in digital technology and the rising reliance on IT strategies in business delivery process. As a result, the Indian DC market is attracting investors because it offers many untapped opportunities.”

Despite having immense potential to become a DC hub in the APAC region, the report also identifies several hurdles in this path. Several states in India are yet to formulate policies for this segment. Additionally, issues such as a cumbersome approval processfor the acquisition of infrastructure and prolonged environmental clearances also need to be addressed. The report also highlights testing the viability of a DC location for high seismic zoning, probability offloods, and extreme heat conditions – all of which could be a huge deterrent for players looking to set up a DC in certain cities.

The report points out that hyperscale DCs would be the next big demand driver in the industry, consideringthat performance computing, automation and standardization are fast becoming industry buzzwords. It also states that currently most of the demand is being generated by businesses relying on internet communication and data storage.

While large financial institutions and telecom companies are likely to develop captive DCs for hosting their increasing data storage needs, DC service providers are also expected to invest in enhancing their capabilities to meet the demand of small and mid-sized users.