India’s information centre business, which expects revenues to develop 20% y-o-y in FY21, is experiencing large demand for expansion, as the country’s appetite for consuming information grows at a scorching pace. Buoyed by the sentiment, analysts project the existing capacity of about 360 megawatt (MW) to treble in the subsequent 4-5 years as the digital economy landscape matures additional. According to a report by Crisil, business capacity is probably to expand more than 3-fold to hit 1,one hundred-1,200 MW by FY25 on the back of $4-5 billion investments announced more than the previous 3 years for each brownfield and greenfield expansion.
“Also, on account of Covid, data consumption has seen a sharp 38% rise y-o-y in Q1 FY21. On the back of this, we expect the industry to log a rapid 25-30% CAGR to $4.5-5 billion by FY25. Growth drivers include an exponential surge in data being generated and growing need for local data storage in line with the government’s thrust on data localisation,” it noted.
The Indian information centre business, which accounts for 1-2% of the international share, is estimated to have clocked a modest CAGR of 15-20% considering that FY16 to touch about $1 billion in fiscal 2019 and about $1.2 billion (about Rs 8,900 crore) in FY20, Crisil mentioned. According to a joint report by TAIPA-EY in September this year, information centres are witnessing a steep development trajectory and the industry in India is anticipated to develop at 8.4% CAGR from 2018-2023.
JLL India, in a report launched in August, projected the business to add 703 MW by finish-2025, translating into an chance of 9.3 million sq ft of actual estate improvement. Mumbai is anticipated to garner a substantial share of this impending chance owing to its current infrastructure, followed by Chennai and Hyderabad. These capacity additions would call for greenfield investments to the tune of $4.9 billion (about `36,300 crore) to fuel the future improvement of the sector, the actual estate consultancy mentioned.
Besides, the ministry of electronics & IT (MeitY) is also functioning on building the business. On November 5, MeitY floated a draft information centre policy for advantage of the sector and ecosystem. It has sought stakeholder comments by November 20. The draft report will be followed by a detailed scheme with implementation recommendations and particulars of fiscal and non-fiscal incentives to be supplied by the Centre and states.
The traction this segment is experiencing can be gauged from the reality that in about 10 days 3 massive expansion plans have been announced. On October 28, Yotta Infrastructure, a Hiranandani group firm, mentioned it will invest up to Rs 7,000 crore for setting up a information centre park in Greater Noida.
Then on November 3, Nextra Data, a Bharti Airtel subsidiary, mentioned it has inked an MoU with Maharashtra Industrial Development Corporation to establish two information centres in Mumbai and Pune. On Friday, Amazon Web Services announced investment of $2.7 billion (about Rs 20,700 crore) in Telangana to set up many information centres.
Crisil says the large demand for storage is getting driven by exponential boost in information volume and penetration (about 75% by fiscal 2025).
The boost in information volume would be supported by higher development in e-commerce, boost in usage of social media, higher preference for more than the prime (OTT) platforms, government’s impetus to Digital India and information localisation norms, which assistance improvement of regional information centres, it added.
This is also fantastic news for cities beyond the metros and tier-II towns. Crisil Research expects the share of the prime 4 cities to decline marginally in the subsequent 5 years as lack of space and greater rental charges along with enhanced infrastructure availability in subsequent-rung cities leads to some bigger hyper-scale information centres getting set up in these cities. Due to lack of high-quality and dependable infrastructure across a majority of places in India, about 60% of the total quantity of information centres are situated in the prime 4 cities. In reality, the prime seven cities accounted for a lot more than 75% of the total information centres in India.