Budget 2022: With easy credit, companies to ramp up data centres this year

Infra status for data centres and energy storage systems will give companies access to long-term financing and lower interest costs

Companies will accelerate investments in data centres spurred by infrastructure sector status for the industry.

On Tuesday union finance minister Nirmala Sitharaman announced infrastructure status for the data centres and energy storage systems and this will give companies access to long term financing and lower interest costs.

“This year, we will accelerate our capacity augmentation across data center parks in Mumbai, Pune, Bangalore, Hyderabad, Delhi NCR and Kolkata.  We will also add new capacities in our edge sites (small sized data centres) to enable 5G and security services,” said Rajesh Tapadia, CEO of Airtel’s data centre subsidiary Nxtra.

“Also, Oracle will enhance its West India area cloud capacity with us in 2022, which is a huge endorsement of our association with hyperscalers,” he added. The company had last October announced Rs 5,000 crore investment by 2025 to triple its data centre capacities to 400 MW by 2025.

Other companies too are preparing for expansion. Sunil Gupta, CEO of Hiranandani group-run Yotta Infrastructure said that the company had already announced plans to develop hyperscale data centers across key hubs in India and infrastructure status recognition will help accelerate the plans. The company runs a data centre in Navi Mumbai and is setting up another facility in Noida.

 GDC India said that it is working on new greenfield facilities and expansion in Noida, Pune, Chennai and other cities. “ The company is also evaluating expanding in tier II cities beyond the nine cities where we are already present. This is to cater to the growing demand of  the customers for edge sites,” said Bimal Khandelwal, chief financial officer of STT GDC India.

Expansion in the data centre business is coming on the back of growing digital penetration and adoption of cloud.

“The data centre industry capacity is expected to double from 499 MW in the first half of 2021 to 1008 MW in 2023. Increasing optic fiber network and 5G spectrum allocation would mean higher digital push which will increase real estate demand,” said Radha Dhir, CEO and country head of consultancy JLL.

According to India Ratings total investment in the data centre industry in India is expected to touch Rs 70,000-72,000 crore over the next five years. “Going by the historical trend, about 40-50% of the total investment was funded by debt with average tenure between 3-7 years. Given that Data Center investment has a long gestation period (payback period of 3-6 years), access to cheap and long-duration funding was required. Granting Infrastructure status to Data Centers would certainly pave way for the same,” said Prashant Tarwadi, Director, India Ratings and Research.