THE NEXT

DATACENTRE HUB
F E B R U A R Y 2 0 21

Automation Data
Analytics IoT

AI Cloud

IaaS PaaS
Edge Cloud
Colocation Edge Devices

DATA CENTRE
2 INDIA- THE NEXT DATACENTRE HUB

FOREWORD
DEBJANI
GHOSH
President
Covid-19 has made the online world even
more valuable, with the lockdowns
accelerating the usage of data across
enterprises, individuals as well as Also, investments in datacentres support
governments. This increasing online focus growth opportunities for a number of
with government’s call for being allied sectors such as telecom, IT
‘Atma-Nirbhar’ or self-reliance; and data infrastructure and construction, further
protection through data localisation makes acting as a catalyst to boost country’s
datacentres a critical part of the country’s overall economy.
data ecosystem.
This report “India – The Next Datacentres
The criticality of datacentres came to the fore Hub” is NASSCOM’s attempt to highlight
during the pandemic when most businesses the huge potential that the country has
were unable to access their in-house servers from a datacentre market perspective by
during lockdowns, while datacentres were leveraging the ‘India Advantage’.
still operating as they were deemed as
essential services. We hope you find this report interesting
and we look forward to your suggestions
Demand for datacentres remains upbeat, and feedback at [email protected].
despite the pandemic - highlighting
datacentre as the backbone of the
“newnormal online era”.
3 INDIA- THE NEXT DATACENTRE HUB

TABLE OF CONTENTS
Executive Summary 5

Global Datacentre Market – Key Takeaways 8

Global Datacentre Global Datacentre Market - ~$200 billion by 2025 9
Market

Cloud Adoption and Data Localisation – The Key Drivers 22

Drivers, Trends and Focus on Clean Energy and Consolidation – The Key Trends 24
Challenges Land, Carbon Emissions and Security – The Key Challenges 26

India Datacentre Market – Key Takeaways 29

India – The Growing Data Economy 30
India Datacentre India Market Outlook 56
Market Recommendations 57

61

Appendix
4 INDIA- THE NEXT DATACENTRE HUB

TABLE OF FIGURES
9
Global Datacentre Market Investment
2019–2025 ($ billion)

Global Datacentre Investments Share by 12

Infrastructure 2019

Leading Datacentre Hubs Across the World (2019) 20

India Datacentre Market Investment 32

2019–2025 ($ billion)

Global Datacentre Projects by Status (nos.) 61

Global Datacentre Projects by Region (nos.) 61

Global Datacentre Market Investment by 61

Region 2019–2025 ($billion)

India Datacentre Market Investment by 68

Area 2019–2025 (million Square feet)

India Datacentre Market Investment by 69

Power Capacity 2019–2025 (MW)

Retail Colocation Pricing (per Rack per Month) – 1H2020 70

Colocation Pricing (per kW per Month) 1H2020 71

5 INDIA- THE NEXT DATACENTRE HUB

EXECUTIVE SUMMARY
The pandemic has pushed the demand for cloud across the globe with digital transformation
accelerating across industries, and internet becoming a lifeline for people both for work as
well as entertainment. This shift towards cloud has pushed increased investments in
hyper-scale datacentres with the global datacentre market investments expected to reach
~$200 billion per annum by 2025, and India is expected to account for 2.3% of these total
investments.

Global Datacentre Market India Datacentre Market

Cumulative investments of $1.3 trillion are India datacentre market investments are
expected over 2019-2025, with North expected to grow at a CAGR of 5% (~2X of
America being the leading market in terms of the global market) to reach $4.6 billion per
investments, and MEA & LATAM being the annum by 2025.
fastest growing markets followed by APAC.
India is well positioned to garner a larger
Majority of the global datacentre players are share of global datacentre investments as it
colocation providers, followed by cloud provides: significant cost advantage both in
service providers. With growing investment construction and operations; growing online
opportunities, the market is witnessing market and international connectivity; ample
increased interest from real estate and private skilled workforce; and majority investments in
equity players, and entry of many new Tier IV datacentres.
players.

With the increasing investment in hyper-scale

Major Datacentre Locations
datacentres the average size of datacentres
as well their power capacity has increased Mumbai, Chennai, Bengaluru, Hyderabad,
manifold over the last decade. Delhi (NCR) - As they offer good fiber
connectivity, proximity to customers,
IT Infrastructure accounts for ~77% share of availability of skilled workforce, and
total datacentre investments; with the rest submarine cable connectivity.
being invested in electrical & mechanical
infrastructure, and general construction. Selection Criteria
Focus on green datacentres, advanced IT Geographic location, power, fiber
Infrastructure, emergence of edge connectivity, and general construction &
datacentres, and market consolidation are the operations remain the key selection criteria
other key trends shaping up the market. for site selection before setting up a
datacentre.
6 INDIA- THE NEXT DATACENTRE HUB

Outlook

India has a huge potential to take a large

share of global datacentre investments if it is
able to act fast on implementing the recently
announced datacentre draft policy growing
the CAGR by 2X-3X, with annual
investments reaching $6 -$8 billion by
2025.

KEY RECOMMENDATIONS

Faster implementation of
Government’s draft policy

Encourage use of Deemed approvals for

renewable energy regulatory clearances

Level playing ground for all Digitization of RFPs to

datacentre investments lead by example

India Datacentre Market Investment

$6 - 8 billion

$4.6 billion

$3.4 billion
BUSINESS AS USUAL SCENARIO

2019 2025F
SOURCE: Arizton and NASSCOM
7 INDIA- THE NEXT DATACENTRE HUB
3

1
NOVEMBER 2020

GLOBAL
DATACENTRE
MARKET
8 INDIA- THE NEXT DATACENTRE HUB

GLOBAL DATACENTRE MARKET –

KEY TAKEAWAYS
Global Datacentre market is expected to
reach ~$200 billion per annum by
2025, primarily driven by increased
investments in hyper-scale datacentres
amidst rising demand for cloud.

Cumulative investments of $1.3 trillion expected over 2019-2025, with 2020

witnessing highest growth of 3.6%.

Majority of the global datacentre players are colocation providers, followed by

cloud service providers.

IT Infrastructure accounts for ~77% share of total datacentre investments; the rest is
for electrical & mechanical infrastructure and general construction.

Real estate companies are pushing a lot of new investments into datacentres as they
see higher and faster RoI vs. leasing out to other commercial businesses.

During 2019, the market saw entry of 15 new datacentre providers.

Rise in average size (~3X) and power capacity of datacentres as hyper-scalers

focus on investing in large campuses.

North America, the leading market in terms of investments; MEA & LATAM, the
fastest growing markets followed by APAC; currently, India accounts for about 2%
share in global datacentre investments.

COVID-19 Impact :

Increased data traffic has pushed the A temporary halt in construction of datacentres
occupancy rate of colocation datacentres during the lockdown, which quickly recovered
with several investors planning to expand as lockdowns were relaxed. Operations of
their capacities across major datacentre datacentres continued during the lockdown as
locations worldwide. these were deemed essential services across all
major countries.
49 INDIA- THE NEXT DATACENTRE HUB

GLOBAL DATACENTRE INVESTMENTS:

~$200 BILLION BY 2025
The global datacentre market witnessed significant investments over the last few years
owing to strong growth in consumption of internet related services, to reach $171 billion in
2019. Moreover, as investments continue to rise in hyper-scale datacentres amidst rising
demand for cloud services accelerated by digital transformation across industries, this
market is expected to reach ~$200 billion by 2025.

Global Datacentre Market Investment 2019–2025 ($ billion)

CAGR 2.5% The global market is expected to see

198
cumulative investments of over ~$1.3
trillion during 2019-2025, with 2020
set to witness fastest growth at 3.6%
190
y-o-y, due to demand for datacentre
181
capacity surging post the pandemic,
171 as more users are being pushed
online.
2019 2021 2023 2025
Source: Arizton

Cumulative
~ $1.3 investments over
2019-25
trillion 2020 to witness
3.6% fastest growth
in investments
(y-o-y)

APAC - Second fastest

3.6% growing region
(CAGR 2019-25)
410 INDIA- THE NEXT DATACENTRE HUB

Growing Investments: Over Jan 2017–Jun 2020, the global datacentre industry saw
investments in 1,340 projects1; 900 are currently operational, others are expected to be
operational by 2025. North America led in terms of total investments in 2019, with Europe
leading in terms of number of projects (Details in Appendix1).

Share of Global
Investments - 2019 Trends

IT Infrastructure 2019: Saw entry

78% of 15 new
Support market players
Infrastructure
22%

>10%: APAC
(China, India,
~43% North America Indonesia) &
~30% APAC MEA - fastest
~22% Europe growing regions
~5% MEA & LATAM over 2015-19

Source: Arizton

Emergence of New Regional Players: Increased demand is creating opportunities for

new players in the market. During 2019, 15 new players entered the global datacentre
market including Princeton Digital Group (APAC), NDC Data Center (Europe), Yotta
Infrastructure Solutions (India) among many others (Details in Appendix 2).

Increasing interest of Real Estate and Private Equity Firms: This has been a major
growth factor for datacentre investments. Real estate firms have an advantage of owing the
land and they expect to generate higher ROI through leasing the land out to datacentre
providers vs. other commercial ventures2. Expectations of higher and faster ROI is also
getting the private equity interested - accounted for 80%3 of 100+ global datacentre M&A
deals in 2019, with investments increasing 2X over 20163.
May 2020: KKR & Co. Inc. announced its plan to invest $1 billion4 in Europe through its
investment arm Global Technical Realty, the largest private equity investor in datacentres
since 2016.
August 2020: Hiranandani Group, a major real estate developer in India, announced
investments worth ₹19,000 crore ($2.6 billion)5 in datacentres through Yotta
Infrastructure Solutions.

1
Arizton 2
CBRE Survey Synergy Research Group (CRN)
3 4
S&P Global 5
The Week
411 INDIA- THE NEXT DATACENTRE HUB

Local Datacentre Providers Driving Growth: By developing large facilities at multiple

locations:
Sunevision, Hong Kong - In 2018, acquired land covering 27,444 square meters in
Tseung Kwan O, Hong Kong, for datacentre development.
CtrlS, India - Investing in hyper-scale datacentre campuses in Mumbai and Hyderabad
each covering over 2 million square feet of area.

The Rise of Colocation Providers: Majority of this growth in investments is expected to

come from colocation providers who are expected to invest in 300+ projects annually
between 2019-2025.
Colocation providers dominate the global datacentre market.
Global datacentre colocation market by revenue was valued at $35 billion in
2019 and is expected to reach $54 billion in 2025, growing at a CAGR of 7.5%6.
Equinix and Digital Realty, two of the world's leading colocation providers accounted for
31%7 of the total M&A deal value over 2015-2019.
In developed countries, enterprise on-premise datacentre investments are declining due
to significant initial CAPEX & ongoing high OPEX for operating datacentres older than 15
years.

Rise in Average Size and Power Capacity of Datacentres: Over the last five years, the
average size of a facility has increased 3X with majority of the upcoming datacentres
having an area of >50,000 square feet. The total power capacity of a single datacentre
facility on full build-out grew 10X over the past decade crossing 50 MW per facility in
2019. This trend is expected to continue in the coming years as hyper-scalers invest in large
campuses.

Investments by area expected to increase at CAGR 3.6% to reach 39 million square feet
by 2025 (Details in Appendix 3).
Investments by power capacity expected to increase at CAGR 3.5% to reach 7,119 MW
by 2025 (Details in Appendix 4).

MEA & LATAM, the Fastest Growing Markets: Investments in the region (MEA+LATAM)
are expected to grow at CAGR 6.4% over 2019-25, followed by APAC (CAGR 3.6%).

Increase in demand for cloud services and datacentre outsourcing services (colocation
services) remain key drivers.

6
Arizton (Based on revenues of colocation providers worldwide) Synergy Research Group (Fierce Telecom)
7
412 INDIA- THE NEXT DATACENTRE HUB

IT Infrastructure accounts for

over ~75% share
of total datacentre investments

Investments in datacentre infrastructure can be classified based on critical (IT Infrastructure)

and support infrastructure (electrical, mechanical and general construction).
The share of global spend on IT and support infrastructure was 78% and 22%,
respectively in 2019. Going forward this share is expected to remain largely unchanged.

Global Datacentre Investments Share by Infrastructure, 2019 (100% = $171 billion)

8%
GENERAL CONSTRUCTION 5%

9%
MECHANICAL INFRASTRUCTURE

ELECTRICAL INFRASTRUCTURE
78%
IT INFRASTRUCTURE

Source: Arizton

IT Infrastructure

Comprised of servers (55% share), storage devices (32%), network (13%)

Servers: USA and China lead the server market, followed by Japan, the UK, and
Germany.

Storage: Enterprises are migrating from traditional hard disk drive (HDD)-only systems to
all-flash and hybrid storage infrastructure.
Cost of Solid-State Device (SSD) likely to decline 4X over 2019-2025, leading to
strong growth of all-flash and hybrid arrays. ~85% of critical applications are
expected to run on all-flash arrays by 2025.

All-flash arrays storage market was valued at ~$12 billion in 2019, expected to reach
~$25 billion by 2025, CAGR of ~14%8.

8
Arizton
413 INDIA- THE NEXT DATACENTRE HUB

Network: Adoption of high-capacity Ethernet switches, which include 25GbE, 40GbE

and 100 GbE switch ports is expected to grow due to the explosion in data traffic.
Consequently, this is leading to the decline in low capacity ethernet switches namely,
1/10 GbE port switches.

Electrical Infrastructure

Includes UPS systems, generators, power distribution units, transfer switch &
switchgears and others
UPS: VRLA-batteries are likely to be replaced by lithium-ion batteries, which are expected
to capture 25% market share by 2025. Introduction of innovative battery technology like
Nickel Zinc and Sodium-ion is expected to gain traction.

Generators: Generators continue to play a vital role in powering datacentres due to

unreliability in grid power supply. Also, fuel cells are considered as an alternative solution
for generators for backup power supply. For instance, Microsoft tested hydrogen
powered fuel cells as backup power solutions to diesel generators for datacentre in July
2020.

Power Distribution Units (PDUs): Busway systems and rack PDUs are predominantly
used across datacentres. Increased awareness on reducing power consumption is leading
to strong growth in intelligent power distribution solutions.

Mechanical Infrastructure

Consists of cooling systems, rack cabinets and others

Cooling solutions: The use of free cooling solutions has grown considerably in markets
like North America, Europe, China, Japan, South Korea and ANZ. Countries
experiencing tropical climatic conditions such as India depend on air-cooled chillers and
chilled water-based cooling solutions. Regions which experience water scarcity are likely
to use innovative cooling solutions to reduce water consumption.

Racks: Majority of modern datacentres are built with flexible designs, supporting up to
52U rack adoption. The developed market is witnessing the penetration of OCP-rack
infrastructure solutions among hyper-scale facilities.
414 INDIA- THE NEXT DATACENTRE HUB

General Construction

Core & shell development, installation & commissioning services, building & engineering
design are the major services. It also includes services such as physical security and
datacentre infrastructure management.
Construction costs vary by location of the datacentre. For example, in 2018, it cost
around $200 per square feet in Japan, whereas it was around $40 per square feet in
India9.
Over the last 2-3 years, sustainable datacentre designs have been a priority for
datacentre operators so as to improve operational efficiencies. It includes use of
innovative power and cooling infrastructures and renewable energy sources
Datacentres are built with minimum four layers of security, i.e. perimeter security,
datacentre building security, data hall security and electromagnetic pulse (EMP)
shielding.
Use of automation and AI to monitor and manage datacentre operations is expected
to increase. For instance, use of automation and AI enabled controls for datacentre
cooling, which in-turn reduces power consumption.

9
Turner & Townsend
415 INDIA- THE NEXT DATACENTRE HUB

IMPACT OF COVID
The global economy witnessed a slowdown due to the outbreak of the COVID-19
pandemic. While the pandemic has affected industries across the world, the datacentre
industry has been impacted in the following ways:
Temporary halt in construction projects: Several construction projects were brought
to a halt but only for about a month or so to prevent the spread of infection.
However, construction soon continued when the lockdown restrictions were eased.
Datacentre services continued during the lockdown as they were deemed as
essential services in most countries.
Supply chain disruptions: The pandemic resulted in several supply chain challenges,
which impacted the revenue of several infrastructure providers in Q1 and Q2 2020.
However, with easing of lockdown restrictions worldwide, the impact is expected to
decrease from Q3 2020.
Availability of high-quality datacentre services: Necessary precautionary measures
taken by operators worldwide ensured availability of high-quality services.

COVID-19 has significantly increased data traffic and the demand for datacentre services.
The pandemic has increased the occupancy rate of colocation datacentres with several
investors planning to expand their capacities in major datacentre locations worldwide.
Investments in capacity expansion by operators worldwide started to pick up in Q3 2020
owing to the surge in demand in the market.

FACTORS Q1 2020 Q2 2020 Q3 2020

Construction

Supply Chain

Impact Indicators:
VERY LOW LOW MODERATE VERY HIGH
416 INDIA- THE NEXT DATACENTRE HUB

KEY GLOBAL HUBS

Worldwide datacentre market is dominated by USA
and China. The UK, Germany, Netherlands and
France are leading datacentre hubs in Europe. In
APAC, Singapore, Hong Kong, Australia and
Japan are established datacentre hubs. India and
Indonesia are the upcoming markets as they are
expected to experience strong growth during
2021-2025.

In APAC, shortage of land in Singapore and Hong

Kong is expected to increase datacentre
development in India and Indonesia. However,
compared to Indonesia, availability of skilled
workforce is higher in India along with government
support in offering incentives. The Indian market
also has strong potential to support datacentre
demand from African and Middle Eastern countries,
owing to availability of skilled workforce and
improvement in submarine network connectivity
between India and other countries.

USA
The US market is witnessing investments in at least 80 datacentre
INVESTMENTS projects on an annual basis. Virginia is the leading state with
investments of over $1 billion in 2019

Strong demand for datacentre services among enterprises operating

KEY DRIVING in the market coupled with increase in self-built hyper-scale facility
FACTORS development by Facebook, Google, AWS and Microsoft

Digital Realty, Equinix and CyrusOne are each investing a minimum

of $500 million in datacentre buildouts on a y-o-y basis.
KEY PLAYERS/ Hyper-scale operators namely, AWS, Google, Microsoft, Facebook
INVESTORS and Apple are also investing on datacentre campuses supporting a
minimum of 100 MW of power capacity
417 INDIA- THE NEXT DATACENTRE HUB

GERMANY
In 2019, Germany’s datacentre market witnessed investment in
INVESTMENTS around 25 datacentre facilities

The market is mainly driven by data localization law i.e. General

Data Protection Regulation (GDPR) which came into effect from
May 2018. In addition, Industry 4.0 and IIoT are expected to
KEY DRIVING drive market growth in Germany between 2019 and 2025. Also,
FACTORS UK’s decision to move out of European Union (EU) has aided in
the increased of demand for datacentre services in Germany,
Netherlands, and France

KEY PLAYERS/ Equinix, Interxion, CyrusOne, Global Switch and NTT Global
Data Center (e-Shelter) were the leading datacentre investors in
INVESTORS Germany

UK
In 2019, the UK datacentre market witnessed investments in over 20
INVESTMENTS datacentre projects. Colocation providers were the major
contributors with a share of >90% in 2019

KEY DRIVING The UK is the most sought-after location for datacentre owing to
strong business demand for datacentre services from local as well
FACTORS as global enterprises operating in the market

Equinix, Digital Realty, CyrusOne, ST Telemedia Global Data

KEY PLAYERS/ Centres (VIRTUS Data Centres), Telehouse and Colt Data Center
INVESTORS Services
418 INDIA- THE NEXT DATACENTRE HUB

CHINA
In 2019, China dominated datacentre spending in the APAC region
INVESTMENTS with a share of around 48%. China has been seeing an addition of
>20 new datacentres annually between 2017 and 2020

Datacentre investment is led by internet, cloud and

telecommunication service providers like Alibaba, China Unicom,
KEY DRIVING Baidu, China Telecom, Tencent and China Mobile. And the
FACTORS increase in digitalization initiatives carried out by Chinese
enterprises and growing consumption of internet-related services
by consumers in the county

As per government rules, global operators can’t hold majority

KEY PLAYERS/ share in ownership of datacentres, leading to complete dominance
INVESTORS by local operators namely, GDS Services, Shanghai Athub,
ChinData, Qnet, Chayora, China Unicom and Tenglong Holdings

JAPAN
Traditionally dominated by domestic IT companies such as Fujitsu,
Hitachi, NTT Communications, Mitsubishi Electric and NEC. Japan
is now evolving into a global datacentre market driven by global
INVESTMENTS hyper-scale cloud providers such as AWS, Google, Microsoft
Azure and IBM SoftLayer, expanding their presence in the country.
Tokyo is the major datacentre destination in Japan. However, over
the past three years, datacentre operators have increasingly shown
interest to build facilities in Osaka, a cost-effective destination

Adoption of cloud-based services and digitalization of enterprise

business environment is the major driver for Japan’s datacentre
KEY DRIVING
market. However, major drawback of Japan is the high construction
FACTORS cost and environmental hazards namely, earthquakes - which
makes site selection a difficult task

KEY PLAYERS/ MC Digital Realty, NTT Communications, Fujitsu, Colt, INAP,

INVESTORS Equinix and KDDI Telehouse are the leading datacentre operators
419 INDIA- THE NEXT DATACENTRE HUB

INDIA
The India market is witnessing investments in at-least 10 datacentre
projects on an annual basis from datacentre service providers. The
INVESTMENTS
state of Maharashtra continues to dominate with investment share
of over 50% in the market

Government's Digital India initiatives to spur demand for

KEY DRIVING datacentre services from central and state government in India. The
proposed Data Protection Bill 2018/19 will be one of the key
FACTORS
driving factors for market growth going forward

Service providers including NTT Global Data Centers (Netmagic),

ST Telemedia Global Data Centres India, CtrlS, Yotta Infrastructure
KEY PLAYERS/ Solutions, RackBank are investing in datacentre development to
INVESTORS support the unprecedented demand that will arise through data
localization policy
20 INDIA- THE NEXT DATACENTRE HUB

Leading Datacentre Hubs Across the World (2019) Illustrative

Power Global
Country Investment Area
($ Billion) (Mn. Square Feet) Capacity Investment
(MW) Share (%)

US 70.0 (1.2%) 13.0 (0.6%) 2,280 (1.6%) 41%

China 20.4 (3.3%) 3.0 (3.3%) 600 (3.0%) 12%

UK 7.5 (4.8%) 1.1 (0.6%) 189 (1.0%) 4%

Germany 7.0 (4.6%) 1.1 (2.7%) 227 (2.9%) 4%

Japan 5.9 (3.7%) 0.6 (5.8%) 126 (4.1%) 3%

Australia 4.9 (4.9%) 0.7 (3.6%) 129 (3.1%) 3%

Netherlands 4.1 (4.3%) 1.0 (5.0%) 169 (3.0%) 2%

Hong Kong 3.7 (2.6%) 0.7 (2.6%) 101 (2.9%) 2%

India 3.4 (5.0%) 1.7 (7.0%) 310 (7.0%) 2%

Singapore 3.1 (4.6%) 0.8 (4.6%) 160 (3.8%) 2%

Indonesia 1.2 (10.8%) 0.2 (8.3%) 35 (7.3%) 1%

Note: Figures in brackets represent % CAGR over 2019-2025

Source: Arizton
21 INDIA- THE NEXT DATACENTRE HUB

2 DRIVERS,
TRENDS AND
CHALLENGES
22 INDIA- THE NEXT DATACENTRE HUB

CLOUD ADOPTION AND DATA

LOCALISATION – THE KEY DRIVERS
The global datacentre market is witnessing a continuous uptrend owing to growing internet
penetration, increased adoption of cloud, rising use of big data analytics and IoT,
increased thrust on data localisation and tax incentives10.

COVID-19 has further accelerated

the market growth as the demand
for data traffic, cloud and digital
technologies witnessed an increase,
with more businesses moving online
post the lockdowns globally.

Global internet penetration increased Global public cloud services market is

to 62% in 2019 from 39% in 2010 expected to grow at a CAGR of
14.5% to reach $364.1 billion by
In India, it grew to 55% in Mar’20 2025
(48.5% - Mar’19)
India’s public cloud services is
Global Mobile Traffic is expected to expected to reach $5 billion by 2023
reach 164EB per month by 2025
(33EB -2019)

INTERNET PENETRATION AND

CLOUD ADOPTION
DATA TRAFFIC

10
NASSCOM SMB Cloud Adoption In India, TRAI, Gartner Research, Frost and Sullivan, IDC, Miniwatts Marketing Group,
Ericsson Mobility Report 2019, PriMetrica and Company Press Releases
 23 INDIA- THE NEXT DATACENTRE HUB

Big data analytics is expected to grow +400 submarine cables under

at CAGR ~29% to reach $68 billion deployment globally (2019)
by 2025
~ 90 submarine cable projects are
Number of IoT devices to reach ~75 expected during 2019-22
billion in 2025, generating 79.4 zetta-
bytes of data Jio (India) has proposed 2 submarine
cable systems connecting Singapore
and Europe (operational by 2022)

BIG DATA ANALYTICS & IOT IMPROVED FIBER CONNECTIVITY

Data localization laws are gaining Datacentre is a capex intensive

prominence such as GDPR in Europe business, thus most countries are
and Cybersecurity Law in China offering incentives on :

Personal Data Protection Bill, Sales and property tax

2018/19 in India is also under Electricity pricing
consideration

DATA LOCALIZATION LAWS TAX INCENTIVES

10
NASSCOM SMB Cloud Adoption In India, TRAI, Gartner Research, Frost and Sullivan, IDC, Miniwatts Marketing Group,
Ericsson Mobility Report 2019, PriMetrica and Company Press Releases
24 INDIA- THE NEXT DATACENTRE HUB

FOCUS ON CLEAN ENERGY AND

CONSOLIDATION – THE KEY TRENDS
Increasing efficiency of datacentres has always been a key focus area for operators and
developers. In 2007, The Green Grid, a non-profit organization, was established to focus
on ways to improve the efficiency of datacentres11. This also resulted in an increase in use
of renewable sources and other energy efficient innovations. A shift towards advanced IT
Infrastructure, emergence of edge datacentres, and market consolidation are the other key
trends shaping up the market.

The rise of Shift towards Advance

Green Datacentres IT Infrastructure

In 2019, the average PUE of datacentres Enterprises in datacentres are shifting

was in the range of 1.8–2.0 worldwide; towards advanced IT infrastructure
while the ideal PUE value is 1.0 including:
Hyperconverged Infrastructure
Thus, there is an increasing focus on green
(HCI): Offers scalability, reliability,
datacentres which utilize energy-efficient
easier configuration and
technologies and renewable energy
administration at lower costs
August 2020: Digital Realty powered All Flash Array Storage: Enables
its Dallas area datacentre with 65 faster storage and retrieval of data
MW solar energy from Pattern Energy, compared to traditional storage
Texas (Hard drives)
Increased Use of Energy Efficient
High Capacity Switches: Enhances
Solutions such as free cooling and
network performance as they come
liquid-immersion/ direct-to-chip solutions
in high capacity variants of 200GbE
which increases PUE efficiency; and DCIM
and 400GbE switch ports
software that leverages automation to
enable predictive maintenance

Introduced key efficiency metrics - Power Usage Effectiveness (PUE), Carbon Usage Effectiveness (CUE), Water Usage Effectiveness
11

(WUE). Sources: Digital Realty, Amazon, EdgeMicro, Smart Edge Data Centres, Digital Realty-Adani Group, Equinix-GPX,
451 Research & Ericsson
25 INDIA- THE NEXT DATACENTRE HUB

Need for Geographic

Emergence of Edge Expansion Driving
Datacentres Consolidation

Increasing use of compute-intensive The need for stronger market presence is

technologies like IoT and AI has driving M&A deals in the market
increased the need for faster network
>1,700 datacentre M&A deals
response to customers, in-turn driving the
worth ~$115 billion closed during
demand for edge datacentres
2010-2020 (as of Sep’ 20)
In 2020, Smart Edge DC announced
Leading colo-market players
its plans to deploy edge datacentres
Equinix and Digital Realty have
across ~1,000 locations in the UK,
invested +$30 billion over the last
highlighting more storage being
decade
deployed in secondary and regional
August 2020: Equinix announced
markets
acquisition of GPX Global Systems in
India ($161 million)
In August 2020, EdgeMicro
announced its plans to deploy 5
New investor segments-infra funds,
edge datacentres in US
SWFs, pension funds and family
pushing more money into the market
October 2019: Equinix & GIC,
Singapore launched a JV to invest $1
billion in Europe

Introduced key efficiency metrics - Power Usage Effectiveness (PUE), Carbon Usage Effectiveness (CUE), Water Usage Effectiveness
11

(WUE). Sources: Digital Realty, Amazon, EdgeMicro, Smart Edge Data Centres, Digital Realty-Adani Group, Equinix-GPX,
451 Research & Ericsson
26 INDIA- THE NEXT DATACENTRE HUB

LAND, CARBON EMISSIONS AND

SECURITY – THE KEY CHALLENGES
Location of the datacentre facility plays a vital role in assuring service continuity of the
facility. The cost of downtime for 33% of all incidents globally, cost enterprises over
$250,000 per incident, and about 15% of incidents cost over $1 million12 per incident.
Apart from choosing the best location, datacentre operators are reeling under pressure to
cut-down carbon emissions and ensuring both physical and logical security of datacentres.

Location Constraints

Skill Availability: Developed countries such as the US and the UK have moderate skill
shortages for advanced datacentre construction and design, while for India, this remains a
key challenge

Government Approvals: Smooth in countries like Singapore, while a time-consuming

process in India

Power and Other Resources: Inadequate availability of power and water is a key
challenge for emerging countries in LATAM, Africa and India. Availability of land is
becoming a key concern in countries like Singapore and Hong Kong; this, along with entry
barriers for global providers in China, is expected to help India emerge as a preferred
location in APAC region

Carbon Emissions

High Power Consumption: With significant growth in datacentres worldwide, their use of
power has increased. In 2018, datacentres consumed 1% of the world’s electricity; this is
set to grow further in the coming years. A datacentre with a total power capacity of 1,300
kWh and 1,000 kWh of IT load, operating at PUE of 1.30, consumes an average of 11.4
million kWh of energy and emits 7,500 tons of CO2 annually

Pressure to Reduce Carbon Emissions amidst a likely Carbon Tax: Increasing focus on
renewable energy as a carbon tax on datacentres is likely due to growing emissions. In
2019, Singapore Govt. set a carbon tax of S$5/ton of CO2

12
Uptime Institute, Schneider Electric’s Carbon Footprint Calculator, Singapore Carbon Tax, Sciencemag.com
27 INDIA- THE NEXT DATACENTRE HUB

Datacentre Security

Security Threats: To the datacentre facility from physical damages; safety of IT Infrastructure
from attacks and network vulnerabilities

Growing Complexities in Datacentre Environment Increasing Logical Threats: With a

variety of hardware and software platforms integrated to handle data flow in and out of the
facility, a variety of logical threats are emerging such as DDoS attacks, web application
attacks, DNS infrastructure exploits, SSL-induced security blind spots, weak authentication,
and brute force attacks. Legacy systems in datacentres are more prone to these attacks

12
Uptime Institute, Schneider Electric’s Carbon Footprint Calculator, Singapore Carbon Tax, Sciencemag.com
28 INDIA- THE NEXT DATACENTRE HUB

3 INDIA
DATACENTRE
MARKET
29 INDIA- THE NEXT DATACENTRE HUB

INDIA DATACENTRE MARKET –

KEY TAKEAWAYS
India datacentre market is expected to
reach ~$5 billion by 2025, primarily
driven by growing internet penetration,
increased cloud adoption, government’s
digitization initiatives and the push
towards localization.

Cumulative investments of ~$28 billion expected over 2019-2025.

At about $3.4 billion investments in 2019, India’s share in the global datacentre
market stood at ~2%; in the base case scenario, by 2025, India’s share is estimated
to be 2.3%.

In terms of CAGR over 2019-2025, India is expected to grow at ~5%, 2X faster

than global.

India is currently home to 80+ third-party datacentres and is witnessing investments

in around 15 projects annually, with growing presence of both local and
international players.
Majority of these investments are being done in outsourced datacentres which are
gaining demand amidst increasing cloud adoption.

The India Advantage

Majority of investments in India are focused on advanced Tier IV datacentres.

India has a major cost advantage compared to matured regions both on

development as well as operational costs.

Availability of Engineering skillset.

COVID-19 Impact
Increased capacity utilization of existing outsourced datacentres.

Consequently, service providers have fast track their planned expansions.

30 INDIA- THE NEXT DATACENTRE HUB

INDIA – THE GROWING DATA ECONOMY

Growing internet penetration, increased adoption of cloud, IoT, growing use cases for
AR/VR, AI/ML, big data analytics and edge computing coupled with the Government of
India’s (GoI) digitisation initiatives are key factors driving the growth of India’s data
economy.

Internet penetration in India witnessed a significant increase to 50% in January 2020

with the number of active internet users increasing 3X13 over 2015, with both urban and as
rural areas contributing to this growth. Further impetus came from government’s regulations
to localize data storage, ₹8,000 crore (~$1.1 billion) budget allocation in 2020 under
the National Mission on Quantum Technologies and Applications (NM-QTA) and the
Reserve Bank of India’s target of a tenfold increase in digital financial transactions.

Moreover, this digitisation push accelerated during the COVID-19 with

data-usage-per-subscriber rising at an all-time high of 12.1 GB14 per month in quarter
ending June 2020, amidst increased work-from-home, online education, OTT
consumption, online gaming and casual internet use during the lockdown.

India has the second largest internet user base globally, which has further accelerated
post the pandemic as more number of people moved online and small businesses
digitised. India had an internet subscriber base of 749.1 as of June 202015, which is
expected to cross 1 billion16 by 2025.

This has led to an increase in the amount of data generated and consumed. Indians
consumed the highest amount of data per month at ~12GB in 2019, globally, which is
expected to double over the next five years.17

This rise in data coupled with an increasing focus on data protection and data localisation
policies is driving the demand for datacentres in the country. Consequently, datacentre
investments have risen significantly over the last few years and this trend is expected to be
maintained in the coming years.

¹³Atlas VPN 14
TRAI and CARE Ratings TRAI
15 16
Atlas VPN Ericsson
17
31 INDIA- THE NEXT DATACENTRE HUB

Investments in Datacentre Market

in India expected to reach about
$5 billion by 2025
India is home to 80+ third-party datacentres and
is witnessing investments in around 15 projects
annually.

Mumbai, Bengaluru, Chennai, Delhi (NCR), Hyderabad and Pune are the key cities
accounting for majority of the datacentres. Calcutta, Kerala and Ahmedabad are the
upcoming destinations.

India has a growing presence of global datacentre operators such as NTT Global
Data Centers (Netmagic Solutions) and ST Telemedia Global Data Centres (India),
Colt DCS, Equinix and Digital Realty (in partnership with Adani Group).

The market also has a strong presence of local service providers such as CtrlS, ESDS
Data Center Solutions, RackBank, Pi Datacenters and BSNL (Nextgen Infinite),
NGBPS, WebWerks, Airtel (Nxtra Data Centers), Sify Technologies.

Datacentre Projects Status In India (January 2017 - June 2020)

25 20 20 5
PROJECT UNDER ANNOUNCED PLANNED
OPERATIONAL DEVELOPMENT PROJECTS PROJECTS
PROJECT
Source: Arizton
 32 INDIA- THE NEXT DATACENTRE HUB

India Datacentre Market Investment 2019–2025 ($ billion)

CAGR 5.0%
These growing datacentre market
4.6
4.2 investments in turn drive the demand for
3.8 datacentre infrastructure investments
3.4
including the demand for IT, electrical,
mechanical and general construction
services in India.

2019 2021 2023 2025

Source: Arizton

Cumulative investments Share in global

over 2019-2025 investments in 2019

~$28
billion 2X ~2% 80+

Faster growth than Third party

global market datacentres

India Datacentre Market Investment Share by Infrastructure ($billion)18

India has strong presence of infrastructure

providers such as Dell Technologies,
Schneider Electric; system integrators $3.4 $4.6
(Wipro, TCS and Prasa Infocom) as well as 9% 11%
9% 10%
general construction providers (Sterling & 15% 17%
Wilson, L&T Construction), which further
support investments in datacentres in the 67% 63%
country.

With increasing investments in hyper-scale

2019 2025
datacentres, share of support infrastructure
(electrical, mechanical and general IT Infrastructure Electrical Infrastructure

construction services) is expected to Mechanical Infrastructure General Infrastructure

increase in the coming years.

18
Arizton
 33 INDIA- THE NEXT DATACENTRE HUB

Datacentre Market Landscape – Captive Vs Outsourced

Broadly the datacentre investments in India can be categorized into captive datacentres
and outsourced datacentres.

Captive Datacentres: Owned and operated by enterprises themselves. On an average,

there are new investments in at least 60 captive datacentre projects annually in India
primarily driven by the public sector.

The market is expected to see an increase in deployment of modular/containerized

captive datacentre facilities i.e. 20-30 annually in the coming years, as that helps in
better utilization of the commercial office space.

However, investments in captive datacentres by private sector enterprises in India

have been declining primarily on account of the shift to cloud platforms, though it is
growing for governments and public enterprises.

The new demand in the segment is primarily coming from public sector and
educational institutions, while it is majorly restricted to expansion/upgradation of the
existing facilities for the private sector.

CAPTIVE DATACENTRE

Control over Higher CAPEX

infrastructure and OPEX
PROS

CONS

Security Scalability
Challenges
Less
Dependence Highly Prone
on Internet to Data Loss
Access

Outsourced Datacentres: Developed and operated by third-party service providers;

these can be classified as – Hosting Services, Colocation Services and Hybrid Services
(Details in Appendix 9).

18
Arizton
 34 INDIA- THE NEXT DATACENTRE HUB

Hosting Services account for most revenues

Majority of the outsourced datacentre developers/operators such as NTT Global Data
Centers (Net Magic), Ctrl S offer hosting services in India. Also, global cloud service
providers such as AWS, Microsoft, Google, IBM, and Oracle offer cloud hosting services
for Indian customers through their physical cloud regions in India. On an average, hosting
services contribute to 50% of the local outsourced datacentre service providers’ total
revenue, while colocation and hybrid services together account for remaining 50% of the
revenue.

OUTSOURCED DATACENTRE

Scalability Possible Hidden

Cost
PROS

CONS
Up to 99.99%
Uptime Less Control over
Infrastructure
Reduced CAPEX

Improve Physical
Security

Colocation Services Market

Colocation services in the market has gained significant traction especially among large
enterprises users in India

NTT Global Data Center (Netmagic) and ST Telemedia Global Data Centres (India)
are the leading players in terms of colocation services. Netmagic as well as other
colocation service providers such as Ctrl S, Sify Technologies, Reliance, Rackbank
and Airtel (Nxtra) also offer hosting services.

Major end-users of colocation services in India include cloud service providers, BFSI
and entertainment sector, content delivery network providers, and e-commerce
organizations. Emerging sectors include healthcare, state & central government
agencies, manufacturing and logistics.

Consequently, the colocation market in India is expected to increase at a CAGR of

16% to reach ~$1.4 billion by 2025 from $550 million in 201919, a 2.5X growth.

19
Arizton (Based on company colocation revenues)
35 INDIA- THE NEXT DATACENTRE HUB

Outsourced Datacentres Gaining Traction

The outsourced datacentre market in India is expected to grow significantly in the
coming years owing to the migration of IT enterprises from captive datacentres to
hyper-scale facilities, which is further aided by the need to establish physical
infrastructure by global organizations amidst the push for data localization.

Cloud leading the demand - Key sectors driving this growth include cloud
service providers, content providers (such as OTT players) and BFSI sector.

Majority investments in Tier 1 cities, with growing focus on Tier 2 - Majority

of these outsourced datacentre investments are currently focused on Tier 1 cities,
with only a few outsourced datacentre providers such as NGBPS Limited, BSNL
(Nxtgen Infinite), Pi Datacenters, and RackBank operating facilities in Tier 2 cities.
Going forward, outsourced datacentre investments in Tier 2 cities is expected
to increase amidst a rising demand from local governments, enterprises, and
educational institutions

Hyper-scale Datacentres to lead the new normal - In recent years, increased

demand for third-party datacentre services such as colocation and hosting
services has led to the evolution of datacentres. The datacentre industry has
evolved from small-scale facilities (<5 MW) to hyper-scale facilities (>40 MW).

Hybrid Services
Hybrid services is combination of colocation as well as hosting services. Enterprise
customers procure infrastructure and host in a colocation facility, while the datacentre
service provider manages the day-to-day operations.

In India, the market is still in the nascent stage, with only a few datacentre operators
like, NTT (Netmagic Solutions) and CtrlS, able to provide advanced hybrid services.
Currently, ~20% of the customers opt for hybrid services. Going forward, this is
expected to grow with the increase in adoption of colocation services.

Outbreak of the COVID-19 pandemic has increased capacity utilization of existing

outsourced datacentres during 1H2020. This has prompted service providers to fast
track their planned expansions, thereby aiding the growth in investments in the market.
In addition, the possibility of implementation of data localization laws, growing
e-commerce and other digital transformation initiatives are also acting as a growth
catalyst.
36 INDIA- THE NEXT DATACENTRE HUB

The India Advantage

Focus on Tier IV Standards:

Majority of these upcoming investments in datacentres are for Tier IV standards (the
highest rating in datacentre standards), certified by the Uptime Institute in India. Yotta
Infrastructure Solutions, GPX Global Systems (Equinix) and Pi Datacenters are the notable
companies investing in Tier IV facilities.

Cost:

In India, cost of developing a Tier III datacentre costs around $3.0–$3.5 million, while
for a Tier IV datacentre it is around $4.5-$5.0 million. This is 50%20 cheaper compared
to major global markets such as the US, the UK, Germany, Singapore, Hong Kong, and
Japan.
The retail and wholesale colocation prices in matured markets such as Singapore,
Hong Kong, and Japan are higher compared to India with the difference being 1.4X
- 2X21 as of 1H2020 in case of retail colocation (Details in Appendix 10).

Skills:

Skilled workforce is among the major site selection criteria for datacentre development
and operations. Engineering skill shortage is a major challenge in developed datacentre
markets such as the North America and Western Europe, where it is a benefit for India to
position itself as a major datacentre hub.

Location advantage:

India has a huge data consuming market, a growing submarine cable connectivity
system, and a fairly stable geography (with most cities not prone frequent
earthquakes/other natural disasters). These factors coupled with the increasing shift
towards cloud makes India a hotspot for datacentres. Building datacentres in new tier 2
cities where internet use is booming is also a strategic business move, as it would help in
easing congestion and speed up internet services, creating increased opportunities for
edge datacentres in the country.

Arizton (Primary Research)

20 21
Arizton
37 INDIA- THE NEXT DATACENTRE HUB

India has an internet user base of over 700 million subscribers which is expected to
reach one billion22 by 2025. It is also the wold’s second largest internet user market.23

As of June 2020, there were 17 submarine cable projects which connected India with
the rest of the world; with Mumbai, Chennai, Cochin, Tuticorin, and Puducherry
being the landing cities for submarine cables in India.
With increasing internet traffic, more investments are being put into new projects.
For example - Reliance Jio has planned two submarine cables - India-Asia-Xpress
(IAX) and India-Europe-Xpress (IEX), which connect India indirectly to the US
through Southeast Asia and Europe. These cables are likely to support capacity of
over 100 Tbps, and are likely to be operational by 2023.

22
Atlas VPN IAMAI/NIelsen
23
38 INDIA- THE NEXT DATACENTRE HUB

Major Datacentre Locations in India

Majority of the datacentres in the country are concentrated in Tier 1 cities namely,
Mumbai, Chennai, Bengaluru, Hyderabad, Delhi as they offer good fiber connectivity,
proximity to customers, availability of skilled workforce, and submarine cable connectivity.

Submarine cable connectivity is a key advantage in case of Mumbai and Chennai

making them the top two locations in terms of number of operational outsourced
datacentres.

Bengaluru and Hyderabad are best placed in terms of environmental hazards criteria
as they fall in Seismic Zone II. They also have favourable land costs compared to
Mumbai, Chennai and Delhi.

Hyderabad and Mumbai also offer tax incentives for datacentres, while skills
availability remains a major support factor across all locations.

Kolkata and Pune are key upcoming cities as the demand across these locations is driven
by digital transformation initiatives by government, improvement in terrestrial network
connectivity, and proximity to customers.

Mumbai (Maharashtra)24

All major datacentre operators in India such as ST Telemedia Global Data Centres India,
NTT Global Data Centers (Netmagic), Reliance Communications, CtrlS and Sify
Technologies have their presence in Mumbai. Mumbai has attracted significant
investments from datacentre operators because the city is connected to 12 submarine
network cables, which connects the city with rest of the world.

Mumbai is the financial and commercial capital of India and is the headquarters for
several global and local organizations including major banks. As of Sep-2020, there
were at-least 20 operational outsourced datacentres in Mumbai which supported a total
of over 250 MW of power capacity.

24
Sources: Maharashtra Tax & Incentives Data Centre, Wheebox India Skill Report 2019, Mumbai Climate AccuWeather, Arizton
39 INDIA- THE NEXT DATACENTRE HUB

Major Site Section Criteria Description

Seismic Zone III: Low-moderate impact from earthquake

Environmental Floods: Moderate to high impact through monsoon
Hazards floods (June-October), resulting in power
outages/fluctuations

High Temperature (2019): 40 Degree Celsius

Climatic
Low Temperature (2019): 13 Degree Celsius
Conditions
Water Shortage: Moderate to High

Increased government support for hyper-scale facility

development with over 100 MW power capacity
Power Availability through incentives for establishing datacentre park.
& Cost
Power Cost: From $0.08 to $0.13 per kWh per month

Datacentre developers/operators involved in the

building of integrated datacentre parks with minimum
investment of $200 million can obtain incentives in terms
Tax Incentives of stamp duties and VAT refunds. The exemption on
electricity duty is provided as per the state’s IT policy
2015

Maharashtra Industrial Development Corporation

(MIDC) had allocated 600 acres of land for datacentre
Land Availability development near Taloja Industrial Estate, Navi Mumbai,
& Costs Maharashtra, India in 2019. Land Cost: $20–$35 per
square feet

Navi Mumbai is a targeted location for datacentre

development. The estimated distance from Navi Mumbai
Transport and to Mumbai International Airport and Mumbai Railway
Accessibility Station is 30–40 kilometers
Upcoming: Navi Mumbai Airport (~10 kilometer) from
datacentres

Skilled Workforce: Moderate to High

Skilled Workforce Ranked fifth in employability, according to Wheebox
India Skill Report 2019
40 INDIA- THE NEXT DATACENTRE HUB

Internet DE-CIX, National Internet Exchange (NIXI), Extreme

Exchanges Internet Exchange (Extreme IX)

Chennai (Tamil Nadu)25

Chennai’s connectivity to Asian countries through the seven submarine cables is a major
factor attracting datacentre investments, making it a preferred disaster recovery location
among customers.

During 1H2020, the Tamil Nadu government signed a MoU with Yotta Infrastructure
Solutions, Princeton Digital Group, HDCI Data Center, ST Telemedia Global Data
Centres, and Adani Group, for over $1 billion datacentre investment in Chennai. As of
Sep-2020, at-least seven operational outsourced datacentres in Chennai supported a
total of over 50 MW of power capacities.

Major Site Section Criteria Description

Seismic Zone III: Low impact from earthquakes

Floods: Moderate to high impact through monsoon

Environmental floods (October–December), resulting power
outages/fluctuations and affecting commute
Hazards
Natural Disasters: Tsunami (2004) and Chennai Floods
(2015)

High Temperature: 43 Degree Celsius

Climatic
Low Temperature: 21 Degree Celsius
Conditions
Water Shortage: High Risk

Government support for datacentre development based

on IT/ITeS policy with minimum threshold in investment
Power Availability amount
& Cost
Power Cost: From $0.09 to $0.12 per kWh per month

Sources: Wheebox India Skill Report 2019, Chennai Climate AccuWeather, Arizton
25
41 INDIA- THE NEXT DATACENTRE HUB

In 2020, the state government extended its support to

Land Availability facilitate datacentre development through allocation
& Costs of land and increase in power capacities in Chennai.
Land Cost: $20–$35 per square feet

Hyper-scale datacentres deployment outside the central

city of Chennai are being developed in locations such
Transport & as Oragadam and Sriperumbudur, apart from existing
datacentres in the city centre.
Accessibility Distance from these datacentres to Chennai International
Airport: Approx. 40 Km and Chennai Railway Station:
approx. 60 Km Nearest City: Bangalore (~350 Km)

Skilled Workforce: Moderate to High

Skilled Workforce Ranked second for employability, according to
Wheebox India Skill Report 2019

Internet Exchanges DE-CIX, National Internet Exchange (NIXI), Extreme

Internet Exchange (Extreme IX)

Bengaluru (Karnataka)26

Availability of skilled workforce and strong network connectivity to Chennai and

Hyderabad are the major factors supporting the growth of datacentres in Bangalore.

The market has witnessed increase in datacentre development over the last 2–3 years
driven by demand from IT/ITeS companies based in the city. As of Sep-2020, at-least 12
operational outsourced datacentres in Bangalore supported a total of more than 60 MW
of Power Capacity.

Sources: Wheebox India Skill Report 2019, Bangalore Climate AccuWeather, Arizton
26
42 INDIA- THE NEXT DATACENTRE HUB

Major Site Section Criteria Description

Environmental Seismic Zone II: Low impact to earthquakes

Hazards

High Temperature (2019): 37 Degree Celsius

Climatic
Low Temperature (2019): 12 Degree Celsius
Conditions
Water Shortage: High Risk

Power Cost Power Cost: From $0.08 to $0.12 per kWh per month

Land Costs Land Cost: $15–$25 per square feet

Operational datacentres in Bangalore are mostly located

outside the city. Approximate Distance of existing
Transport and datacentres to Bangalore International Airport: 40–60
Accessibility KM and Bangalore Railway Station: 20 KM
Nearest City: Chennai (~350 Kilometers)

Skilled Workforce: High

Skilled Workforce Ranked first for employability, according to Wheebox
India Skill Report 2019

Internet Exchanges National Internet Exchange (NIXI)

43 INDIA- THE NEXT DATACENTRE HUB

Hyderabad (Telangana)27

Hyderabad is headquarters to several global cloud service providers - AWS, Microsoft,

and Google. In 2016, State government of Telangana introduced tax incentives for
datacentres to attract several hyper-scale investments. AWS, a global cloud provider, has
announced hyper-scale datacentre development in Hyderabad in November 2020. As
of Sep-2020, at-least six operational outsourced datacentres in Hyderabad supported a
total of over 25 MW of power capacity.

Major Site Section Criteria Description

Environmental Seismic Zone II: Low impact to earthquakes

No Impact from floods and other natural disasters
Hazards

High Temperature (2019): 43 Degree Celsius

Climatic
Low Temperature (2019): 18 Degree Celsius
Conditions
Water Shortage: High Risk

Datacentre building permissions will be covered under

the single window clearance system of TS-iPASS to fast
track approvals
Datacentres will be permitted to avail renewable energy
sources under an open access system from within the
state after paying the cost component to DISCOMs as
Tax & Other fixed by the ERC (subject to a maximum of one-third of
Incentives their total power requirements)
The government will aid in obtaining approvals and
permits through a single-window for on-site renewable
energy plants
Government shall provide fuel at a price lower than the
market rates to eligible players in the Datacentres
Campus

The government will establish a network of dual power

grids to ensure uninterrupted electricity supply to
Power Availability datacentre campuses
& Cost The government will provide power to eligible
datacentre projects at the cost of generation.
Power Cost: From $0.11 to $0.14 per kWh per month

Sources: Hyderabad Climate AccuWeather, Telangana Datacentre Policy 2016, Arizton

27
44 INDIA- THE NEXT DATACENTRE HUB

The Telangana Government will aid in the allocation of

Land Availability land for datacentre development at a subsidized cost
& Cost Land Cost: $15–$25 per square feet

Operational datacentres in Hyderabad are located both

inside and outside the city.
Transport & Approximate Distance to Hyderabad International
Airport: ~20–50 kilometres and Hyderabad Railway
Accessibility Station: ~20-30 kilometers
Nearest City: Vijayawada (~270 KM)

Skilled Workforce Skilled Workforce: Moderate-High

Internet Exchanges National Internet Exchange (NIXI), Extreme Internet,

Exchange (Extreme IX)

Delhi (NCR)28

Delhi’s Industrial Policy 2010–2021 aims to be beneficial for hi-tech IT/ITeS industries,
including datacentres. Delhi is highly dependent on network connectivity through inland
cable and the datacentres located in the city support majority of businesses across North
India. As of Sep-2020, at-least 10 operational outsourced datacentres in Delhi supported
a total of over 50 MW of power capacity.

Major Site Section Criteria Description

Environmental Seismic Zone IV: Moderate to High impact to earthquake

Delhi is prone to natural disasters such as floods
Hazards

Sources: Delhi Climate AccuWeather, Arizton

28
45 INDIA- THE NEXT DATACENTRE HUB

High Temperature (2019): 48 Degree Celsius

Low Temperature (2019): 3 Degree Celsius

Climatic
Conditions Availability of Partial Free Cooling: approx. 90 days
per year

Water Shortage: High Risk

Power Availability: Moderate

Power Availability
& Cost Power Cost: From $0.08 to $0.11 per kWh per month

Land Availability Land Cost: $25–$40 per square feet

& Cost

Operational datacentres are located in New Delhi.

Approximate Distance to Delhi International Airport:
Transport and ~20-40 kilometers and Delhi Railway Station: ~20-30
Accessibility kilometers
Nearest City: Jaipur, Rajasthan (~280 KM), Punjab
(~380 KM), Lucknow, Uttar Pradesh (~550 KM)

Skilled Workforce Skilled Workforce: Moderate-High

Internet Exchanges DE-CIX, National Internet Exchange (NIXI), and

Extreme Internet Exchange (Extreme IX)

Sources: Delhi Climate AccuWeather, Arizton

28
46 INDIA- THE NEXT DATACENTRE HUB

Major Datacentre Locations in India

MUMBAI CHENNAI BANGALORE HYDERABAD DELHI

Environmental
Hazards

Power Availability
& Cost

Land Availability
& Cost

Network
Connectivity

Skilled
Workforce

Presence of
Leading
Datacentres

Indicator:

HIGHLY LEAST
FAVOURABLE FAVOURABLE
47 INDIA- THE NEXT DATACENTRE HUB

Upcoming Datacentre Locations in India

Kolkata and Pune are key cities with strong potential for datacentre growth. The demand
across these locations is driven by digital transformation initiatives by government,
improvement in terrestrial network connectivity, and proximity to customers.

Pune also has a number of location-based benefits including proximity to Mumbai,

cheaper land rates compared to Mumbai and availability of skilled workforce.

Kolkata’s growth is being complemented by investments in submarine cable landing

stations. For example Reliance Jio Infocomm29 is expected to invest around $75
million to establish submarine cable landing station in Kolkata in 2020-2021, which
will improve connectivity between India and other APAC countries. In January’20,
Reliance Communications commenced construction of a datacentre in Bengal Silicon
Valley.

Notably, COVID-19 has also increased the demand for datacentre services among Tier
2 cities in India, as service providers are getting new demand from state corporations,
banking entities and education institutions.

Pune

Pune’s proximity to Mumbai is among the major reason supporting datacentre growth in
the city, apart from the cheaper land costs (compared to Mumbai) and the supportive
datacentre policy of Maharashtra.

Major Site Section Criteria Description

Environmental Seismic Zone II: Low impact to earthquakes

Less Impact from floods and other natural disasters
Hazards

High Temperature (2019): 41 Degree Celsius

Climatic
Low Temperature (2019): 11 Degree Celsius
Conditions
Water Shortage: High Risk

29
Sources: Reliance Kolkata Landing Station, Reliance Kolkata Data Center
48 INDIA- THE NEXT DATACENTRE HUB

Datacentre developers/operators involved in the

building of integrated datacentre parks with minimum
investment of $200 million can obtain incentives in terms
Tax Incentives of stamp duties and VAT refunds. The exemption on
electricity duty is provided, according to the state’s IT
policy 2015

Increased government support for hyper-scale facility

Power Availability development with over 100 MW power capacity
& Cost through incentives for establishing datacentre parks.
Power Cost: From $0.07 to $0.11 per kWh per month

Land Availability Land Cost: $10–$20 per square feet

& Cost
Operational datacentres in Pune are located outside the
city. Hinjewadi and Dighi are the major locations for
Transport and datacentre development in Pune
Approximate Distance to Pune International Airport:
Accessibility ~10–30 kilometers and Pune Railway Station: ~10-20
kilometers
Nearest City: Mumbai (~150 KM)

Skilled Workforce: Moderate-High

Skilled Workforce Ranked eighth in employability, according to
Wheebox India Skill Report 2019

Kerala

The state of Kerala has a major advantage in its submarine cables connections such as
SAFE, SeaMeWe-3, and FALCON. These submarine cables connect Kerala to Europe,
the Middle East, Africa, and Southeast Asian countries. The market has started to witness
investments in large datacentre projects, with Pi Datacenters currently involved in the
development of the Kochi datacentre. It is expected that other providers will also invest in
Kerala during the forecast period.
49 INDIA- THE NEXT DATACENTRE HUB

Major Site Section Criteria Description

Environmental Seismic Zone III: Low impact to earthquakes

Moderate Impact from floods and other natural disasters
Hazards

High Temperature (2019): 35 Degree Celsius

Climatic
Low Temperature (2019): 21 Degree Celsius
Conditions
Water Shortage: High Risk

Transport and Kochi is the upcoming datacentre destination in Kerala.

Accessibility Approximate Distance to International Airport: ~25–35
kilometers and Railway Station: ~10-20 kilometers

Skilled Workforce Skilled Workforce: Moderate

Kolkata

The city of Kolkata in the state of West Bengal is an upcoming destination for datacentres.
The demand for datacentre services in the city is being driven by local enterprises and
government agencies owing to the increase in digitalization initiatives. Also, Kolkata is a
coastal city in Western India, which is currently witnessing the development of the
submarine cable landing station by Reliance Jio Infocomm at a project cost of around
$135 million (₹1,000 crore). This city will be connected to countries such as Bangladesh,
Thailand, Myanmar, Malaysia and Singapore through new submarine cables, which is
expected to be deployed in the next five years. Datacentre operators, Sify Technologies
and ST Telemedia Global Data Centres India, are currently operating facilities in Kolkata.
50 INDIA- THE NEXT DATACENTRE HUB

Major Site Section Criteria Description

Environmental Seismic Zone II: Low impact to earthquakes

Less Impact from floods and other natural disasters
Hazards

High Temperature (2019): 37 Degree Celsius

Climatic
Low Temperature (2019): 11 Degree Celsius
Conditions
Water Shortage: High Risk

Operational datacentres in Kolkata are located inside the

city. Bengal Silicon Valley is the upcoming location for
Transport and datacentre development
Approximate Distance to Kolkata International Airport:
Accessibility ~5–15 kilometers and Kolkata Railway Station: ~5-15
kilometers
Nearest City: Jamshedpur (~300 KM)

Skilled Workforce Skilled Workforce: Moderate-High

Extreme-IX, DE-CIX, and National Internet Exchange

Internet Exchange (NIXI)
 51 INDIA- THE NEXT DATACENTRE HUB

Site Selection Criteria for Datacentre

The site-selection criterion is gaining significant importance among datacentre developers
and operators in India. Mumbai and Chennai are fairly established destinations for
datacentre operators, as these cities are connected through submarine cables with other
countries across the globe. Cities such as Bangalore, Pune, Delhi and Hyderabad are
among the emerging destinations.

Below is a list of critical factors that play a significant role in the development of
datacentres in India, and how the country is positioned well to leverage most of them.
With the suggested recommendations, the country can improve its position across all the
parameters, in-turn improving the overall market investment outlook.30

The table also provides a weightage for each selection criteria which signifies the
importance of each criteria in the overall selection of location to build and operate
datacentres. Among all the criteria - availability of land, power and network carriers has
a higher weightage compared to others as they are the most important requisites for a
datacentre.

Category Sub-category Weightage India ’s Description

out of 10 Position

Land availability is critical for datacentre site

selection, this is also reflective in the entry of real
estate organizations into datacentre industry
Increased support of state governments namely,
Land Maharashtra, Tamil Nadu, and Telangana for
Geographical
Location Availability 10 datacentre development with increased allocation of
land resources for development of datacentre parks

Proposed establishment of datacentre parks as per

the recent draft policy on datacentres will further
strengthen India’s position

Environmental hazards can hamper datacentre

operations or personnel’s access the datacentre
site on a day-to-day basis
Environmental
Hazards 8 High pollution levels primarily in the metros

Frequent rainfalls and heavy floods cause power

fluctuations and outages

Favorable climatic condition is an additional

advantage for datacentre operations
90% of existing datacentres in India depend on
Favourable air-cooled chillers because of tropical climatic
Climatic 5 conditions and lower availability of water resources
for cooling
Conditions
Northern States in India support some amount of free
cooling solutions namely, Delhi for a maximum of 90
days per year

Labour cost is collected through public portals namely- Glassdoor and Indeed. Sources: Schneider Electric Data Center
30

Cost Calculator, Maharashtra - Datacentre IT/ITES Policy 2015, Telangana Datacentre policy 2016
52 INDIA- THE NEXT DATACENTRE HUB

Category Sub-category Weightage India ’s Description

out of 10 Position

Tax incentives reduce the CAPEX and OPEX for

datacentres, considering it is a highly
capital-intensive industry
Maharashtra, Telangana, Chennai, Gujarat, and
Taxes and Andhra Pradesh are few states offering tax incentives
Incentives 8 for datacentre development. These includes:
1. Allocation of land and power
2. Subsidized and power rate
3. Sales and use tax

There are also some state incentives based on

IT/industrial policy schemes, which are not specific
to datacentres

It’s a key criteria for third party datacentres which

are built and rented to enterprises, who require
access to the facility on a frequent basis
Proximity to
Customers 8 In India, hassle free transportation is a hurdle to most
(Transportation datacentres located outside the city centres.
& Accessibility) Customers have to travel for at least 30 kilometers
from the city centre to reach the facilities that host
their infrastructure. In tier 2 cities, transportation and
accessibility requires significant improvement
compared to tier 1 cities in India

Power is vital for datacentre operations with

availability of power a key consideration in
enabling scalability of datacentre operations
Power
Power
Availability 10 Support from state government for allocation of
uninterrupted power for datacentre parks is
increasing in India with most states looking at
supportive policies such as Telangana and
Maharashtra

Reliability of power supply is crucial for

uninterrupted datacentre operations, as they
have to operate 24X7 running energy intensive IT
Power
Reliability 9 and support infrastructure
All the state governments should improve reliability of
datacentres by enabling dual power supply. This is
also under consideration in the draft datacentre
policy and if implemented, will strengthen the
country’s investment prospects

The focus on sustainable datacentre operations

has grown significantly in the recent past. Thus, it
is a key added benefit towards site selection, with
Renewable
Energy 7 its weightage expected to grow as the datacentre
development intensifies in the country
Sources
53 INDIA- THE NEXT DATACENTRE HUB

Category Sub-category Weightage India ’s Description

out of 10 Position

Use of wind and solar energy to increase among

datacentre developers/operators

The installed and operational renewable energy

capacity in India had crossed 84 GW (gigawatts) in
November 2019, with planned generation of 175
GW by 2022

Deployment of on-site solar farms to generate

renewable power energy sources for datacentres
have also started to gain traction

Power cost constitutes around 60% of the OPEX

of an average datacentre, thus cheaper power is
always a positive factor for datacentres
Electricity prices vary depending on the location of
datacentres

Power Cost 9 Datacentre electricity prices in India are an average

$0.08−0.14 per kWh

Electricity pricing (per kWh) in India is almost same

as regional hubs namely, China, (~$0.10) and
Indonesia (~$0.10). It is low compared to Singapore
($0.12-$0.15), Japan (~$0.20), and Australia
(~$0.13-$0.15)

Network connectivity is very critical for

datacentres operations as they run critical
applications that requires 24*7 uninterrupted
connectivity
The terrestrial network in India is in its growing stage.
Rural areas are increasingly getting connected to
internet, which is expected to strengthen terrestrial
network across India during 2020-2025

Fiber Carrier
Connectivity Availability 10 Majority of datacentres in India are developed as
carrier-neutral facilities

Mumbai and Chennai are the major submarine

cable landing stations making them the key
datacentre hubs in the country

High capacity submarine cables connecting India

through Vijayawada, Kerala, and West Bengal is
expected to emerge during 2020–2025, leading to
strong datacentre growth across these cities

Latency is becoming an important criterion for site

selection as there is an increasing focus on faster
retrieval of hosted data from consumers, and
latency is highly dependent on the carrier
Latency 8 availability
Latency challenges are higher in Tier 2 cities than Tier
1 cities. The scenario is similar across majority of the
datacentre hubs in the world
54 INDIA- THE NEXT DATACENTRE HUB

Category Sub-category Weightage India ’s Description

out of 10 Position

Network disruption is a major challenge in

datacentre operations and thus factors that
hamper connectivity are a key consideration
during site selection
Over 40 fiber connections were damaged in 2019,
Network
Disruption 8 because of uncoordinated road digging activity.
However, overall disruption to datacentre
connectivity is moderate because of redundant
network connectivity

Carrier capacities higher in urban areas than rural

areas

Carrier capacity is an important criteria as the

growing internet traffic in the country would
require high-capacity network carriers
Carrier
Capacity 8 Telecommunication service providers and
government agencies are investing to improve
carrier capacities in the Indian market. The
Department of Telecom is targeting 30 lakh kilometer
of optic fiber roll out by 2022

Availability of labor is very critical for

construction of datacentre as well as operations
India has high availability of skilled labour
General
Labour compared to other regional hubs like Singapore,
Construction
Availability 9 Indonesia, and Hong Kong
& Operations
Low shortage of technically skilled labour with
specific expertise in datacentre infrastructure
operations and management

Labor cost plays a vital role in increasing the

OPEX of datacentres
Labour Labour cost in India is low compared to other
Cost 7 regional hubs like Singapore and Hong Kong. For
instance, average salary for datacentre technician in
India is around $4 per hour compared to Singapore
i.e. $20 per hour

Availability of construction resources plays a vital

role in reducing the construction timeline of the
facility
The construction cost of developing a Tier III
datacentre in India is around $3.5 million per MW,
which is very low compared to other hubs like
Availability of Singapore, Japan, Australia and Hong Kong where
Construction 6 it is $7-$10 million per MW
Resource
In addition, infrastructure vendors operate
manufacturing and assembly plant with only about
20% of the parts being imported into the country
across power and cooling systems. This reduces the
cost of infrastructure procurement in India
55 INDIA- THE NEXT DATACENTRE HUB

Indicator: Impact:

VERY HIGH (Positive)

HIGH

MODERATE

LOW

VERY LOW (Negative)

56 INDIA- THE NEXT DATACENTRE HUB

INDIA MARKET OUTLOOK

Driven by growing cloud adoption and increased impetus on data localisation, the India
datacentre market is expected to grow at a CAGR of ~5.0% to reach $4.6 billion by 2025
in a business as usual scenario (Base case).

India Datacentre Investments by 2025 ($ billion)

Aggressive
Scenario CAGR =
10% - 15% 6.0 - 8.0

4.6
3.4

2019 2025 F

Base Aggressive Source: Arizton and NASSCOM Analysis

In a base case scenario, datacentre market in India is expected to have a share of

~2.5% by 2025, a 1.3X growth over 2019.

A number of industry recommendations which focus on making India a lucrative

market for datacentre investments, if implemented, can push the market size to over $6
billion, increasing India’s share in global datacentre market to 3%-4%.

In an aggressive growth scenario the datacentre market is expected to grow at a CAGR of

10%-15% to reach $6.0-$8.0 billion by 2025.
57 INDIA- THE NEXT DATACENTRE HUB

RECOMMENDATIONS
Government Draft Policy on Datacentres
NASSCOM has been talking to various stakeholders in the ecosystem and had suggested
a number of recommendations31 for the government in May 2020. The government
released a comprehensive draft policy32 in Nov 2020, which takes into account many of
these suggestions. At the institutional level, it suggests setting up of a nodal agency Data
Centre Facilitation Unit (DCFU) under an Inter-Ministerial Empowered Committee (IMEC
-set up under the Chairmanship of Secretary, MeitY). The key focus areas for the draft policy
have been summarised below:

Ease of Doing Business Ecosystem Enabling a Favourable Ecosystem

To provide various incentives to datacentre Ensure reliable power, internet connectivity,

industry and to ease the approval processes change in building code and business continuity

Providing Infrastructure Status to the Availability of uninterrupted, clean

Data Centre Sector and cost-effective electricity for
Datacentres
Simplify clearances for setting up
Data Centres in India MeitY to work with Department of
Telecommunications (DoT) to
Setting up of Pre-provisioned Data facilitate robust and cost-effective
Centre Parks connectivity
Central and State Governments shall
formulate their respective schemes Datacentres to be declared as an
and guidelines (Incentives) Essential Service under “The Essential
Services Maintenance Act, 1968”
Formulation of Data Centre
Incentivization Scheme (DCIS) for Recognize Datacentre as a separate
promotion of Data Centre Parks / category under National Building
Data Centre Code as they require different norms
as compared to other office/
commercial buildings

31
NASSCOM Recommendations in May 2020 32
Draft Datacentre Policy (Released on November 5, 2020)
58 INDIA- THE NEXT DATACENTRE HUB

Setting up Datacentre SEZs Promote Indigenous Technology

Development
Promote research and capacity building by
With benefits to both public sector and
encouraging local manufacturing, JVs with foreign
private sector operators
companies and human resource development

Govt. to set up at least four (4) Data Encourage use of indigenous

Centre Economic Zones (DCEZ) in hardware and software products to
the country, as a Central Sector reduce import burden
Scheme
Encourage joint ventures between
To create an eco-system of the foreign investors and domestic
Hyper-scale Data Centres, Cloud companies to promote participation
Service Providers, IT companies, from Indian companies
R&D units and other allied industries
Promote R&D in Data Centre
ecosystem

Collaborate with Ministry of Skills

Development and Entrepreneurship
(MSDE) and leading academic
institutes to impart large scale
trainings to workforce on Data
Centre, Digital and Cloud
technologies, and facilitate sector
linkages for such trained workforce
59 INDIA- THE NEXT DATACENTRE HUB

Government
The draft policy is a welcome move some additional suggestions for consideration and
inclusion:

Promote use of Natural Gas apart from renewable energy for powering datacentres,
as it is a reasonably clean source.

Encourage States to reduce high wheeling, banking and cross subsidy charges to
increase use of renewable energy.

Level playing field should be provided for all datacentre investments and hence the
incentives not be tied to any limiting criteria.

Policy should encourage deemed approval system for regulatory clearances to

further improve the ease of doing business.

Domestic production may be incentivized, however the policy may ensure there are
no unnecessary barriers for import of specialized equipment which would be critical
for growth & efficiency of datacentres in India.

BIS approvals for equipment used in datacentres needs to be expedited. The approval
process in India may recognise international certifications/ accreditations.

Digitisation of RFPs and other internal processes to lead by example.

60 INDIA- THE NEXT DATACENTRE HUB
3

4 APPENDIX
61 INDIA- THE NEXT DATACENTRE HUB

APPENDIX
1. Global Datacentre market by Region

Global Datacentre Market Investment Global Datacentre Projects* by

by Region 2019–2025 ($billion) Region (nos.)
$171 $198
5% 7% 90
65
LATIN MIDDLE EAST
22% 22% AMERICA & AFRICA

NORTH AMERICA
30% 32% 310
APAC APAC 445
EUROPE
EUROPE

MEA & LATAM

43% 40%
430
NORTH AMERICA
2019 2025

Global Datacentre Projects* by Status (nos.)

900 350 60 30
PROJECT UNDER ANNOUNCED PLANNED
OPERATIONAL DEVELOPMENT PROJECTS PROJECTS
PROJECT
*Data from Jan 17-June 2020. Investments include new datacentre development/expansion; does not include upgrades
and retrofit services; Source: Arizton
62 INDIA- THE NEXT DATACENTRE HUB

2. Global Datacentre Projects

The market saw entry of 15 new players in 2019 including:

BDX (Big Data Exchange) GIGA Data Centers (USA) Princeton Digital Group
(APAC)
Chayora (China) Kepstar Data Management
(Cambodia) Raxio Data Centre
Cirrus Data Services (USA) (Uganda)
NDC Data Centers
Echelon Data Centres (Europe) SpaceDC (Indonesia)
(Europe)
PointOne Development Regal Orion (Malaysia)
Edgecore Internet Real Corp (USA & Canada)
Estate (USA) Yotta Infrastructure
Prime Data Centres (USA) Solutions (India)
Source: Arizton

3. Global Datacentre market by Area

The increased construction of hyper-scale

CAGR
(Million square feet) 3.6% datacentre campuses by cloud service
providers and colocation datacentre
operators is increasing investments in
39
35 37 datacentre area.
32
In 2019, the US contributed ~41% in terms
of area; China and Hong Kong together -
~12%, India ~5%.

On an average, a datacentre
development of 1 MW needs an area of
2019 2021 2023 2025 ~5,000 square feet.
Source: Arizton
63 INDIA- THE NEXT DATACENTRE HUB

4. Global Datacentre market by Power Capacity

The adoption of energy-efficient MW CAGR

3.5%
infrastructure has increased considerably
in the market, which will lead to lower
7,119
power consumption of datacentres. 6,545 6,796
Also, operations of traditional enterprise 5,800
datacentres are being consolidated to
single large facility owing to an increase
in power consumption, with service
providers migrating their workloads to
highly efficient colocation facilities and
cloud platforms.
2019 2021 2023 2025

Hyper-scale operators like Facebook, Google & Microsoft are building datacentre
campuses supporting total power capacities of up to 200 MW on full built.

Increased interest of operators to procure infrastructure with efficiency of >95% for

reduction in power consumption and wastage.

Average operational density worldwide was 5–7 kW in 2019; expected to grow to

10–12 kW by 2025, owing to an increase in adoption High Performance Computing
(HPC) infrastructure.

Datacentres powered by renewable energy have become a preferential choice for

hyper-scale operators and colocation providers.

With the outbreak of the COVID-19 pandemic, the demand for high-capacity
datacentre services from existing customers has increased, which has been met by
colocation service providers by utilizing additional power capacities available at their
operational datacentres. A strong demand for hyper-scale cloud services has led to
significant capacity expansion through wholesale colocation across the globe. This is
expected to continue over the next two years.
64 INDIA- THE NEXT DATACENTRE HUB

5. Other Major Global Hubs

NETHERLANDS
Increasingly witnessing investment from hyper-scale datacentre
INVESTMENTS
operators - Microsoft and Google

Amsterdam is the leading interconnection hub for datacentre traffic

in Europe, which has driven the market significantly over the past
KEY DRIVING five years, along with Frankfurt (Germany). Netherlands
FACTORS datacentre industry had a contracted total power capacity of
~1,626 MW33 as of May 2020, with >85% of facilities powered
by renewable energy sources

KEY PLAYERS/ Equinix, Digital Realty, Microsoft, Google, CyrusOne and Iron
INVESTORS Mountain

HONG KONG
Hong Kong currently hosts around 60 datacentre facilities.
INVESTMENTS Tseung Kwan O Industrial estate is the major location for
datacentre development

Hong Kong is one of the largest digital centers in APAC and is a

gateway to China for global enterprises. High-capacity fiber
KEY DRIVING connectivity to the rest of the world and increasing local demand
FACTORS through digitalization of business and consumer environment are
driving the growth. Shortage of land for greenfield construction is
a major hindrance

SuneVision, Global Switch, Equinix, PCCW, NTT

KEY PLAYERS/
Communications and Equinix are among the leading datacentre
INVESTORS operators in the country

33
Dutch Datacentre Association
65 INDIA- THE NEXT DATACENTRE HUB

SINGAPORE
Singapore is a major connectivity center for datacentre
INVESTMENTS operations in APAC, with >20 submarine cables connecting the
country to the rest of the world

Singapore will continue to attract investment because of strong

fiber connectivity, favourable business environment and
KEY DRIVING availability of skilled workforce. Land scarcity is considered as the
FACTORS major challenge for datacentre development. Also, increasing
interest shown by cloud service providers to establish their
physical presence across other Southeast Asian countries such as
Indonesia, is likely to impact Singapore’s datacentre growth

ST Telemedia Global Data Centres, Kepple DC REIT, Singtel,

Digital Realty, Equinix, and Global Switch. Singapore hosts 60+
datacentre facilities with a strong presence of cloud service
KEY PLAYERS/ providers and colocation providers, providing services to APAC
INVESTORS customers. Google, a major cloud service provider, operates its
self-built datacentre in Singapore. In 2018, Facebook announced
the development of its first APAC datacentre with an area of ~1.8
million square feet on full build

AUSTRALIA
In 2019, Australia's market share in datacentre spending was
INVESTMENTS 13% among the APAC countries. The country hosts 100+
datacentre facilities, with Sydney leading the market with >30
datacentres. Other leading locations include Melbourne and
Perth

KEY DRIVING Digitalization has been a major driving factor for growth, which is
FACTORS driving strong migration of datacentre workloads from on-premise
to cloud or colocation facilities in the country

KEY PLAYERS/ NEXTDC, Canberra Data Centers, Equinix, Digital Realty, Global
Switch, Macquarie Telecom, and Keppel DC
INVESTORS
66 INDIA- THE NEXT DATACENTRE HUB

INDONESIA
Indonesia has attracted significant interest from colocation
providers driven by the entry of cloud service providers. Google
INVESTMENTS and Alibaba already operate cloud region in Indonesia, while
Microsoft and AWS have plans to open cloud regions in the country
in 2021

Improvements in fiber connectivity over the past two years along

with increasing adoption of advanced technologies has made
KEY DRIVING Indonesia a center of datacentre development in APAC. Demand
FACTORS for datacentre services is high from BFSI, content providers and
e-commerce segments

The market is witnessing entry of new players like Space DC & GIC,
KEY PLAYERS/ Princeton Digital Group and Keppel Data Centres. They are
INVESTORS involved in the development of hyper-scale datacentres to attract
cloud-based service providers
67 INDIA- THE NEXT DATACENTRE HUB

6. Major Players in the Datacentre Ecosystem in India

INDICATIVE

PROMINENT DATA
CENTRE SERVICE
PROVIDERS

PROMINENT IT
INFRASTRUCTURE
PROVIDERS
(HARDWARE & SOFTWARE)

PROMINENT
ELECTRIC
INFRASTRUCTURE
PROVIDERS

PROMINENT
COOLING & RACK
INFRASTRUCTURE
PROVIDERS

GENERAL
CONSTRUCTION
& SYSTEM
INTEGRATION
SERVICES

IT SYSTEM
INTEGRATION

TELECOMMUNICATION
SERVICE PROVIDERS
68 INDIA- THE NEXT DATACENTRE HUB

7. India Datacentre market by Area

The availability of land for datacentre development has been a crucial site selection
criterion for datacentre operators. In India, the migration from on-premise datacentres to
dedicated purpose-built facilities is growing considerably amidst the need for scalability,
reliability and business continuity services amongst enterprise customers.

Increased government support in offering land for datacentre development has been a
major benefit for datacentre service providers in India. For instance, Government of
Maharashtra has allocated 600 acres of land for datacentre development in Mumbai.
Also, Government of Telangana has created a datacentre policy to allocate land for
datacentres at a subsidized cost.

The Central Government has also proposed Data Centre Park Policy to support
development of datacentre in the Union Budget 2020.

India Datacentre Market Investment by Area 2019–2025 (million Square feet)

CAGR 7.0%

2.5
2.3
2.0
1.7

2019 2021 2023 2025

Source: Arizton
69 INDIA- THE NEXT DATACENTRE HUB

8. India Datacentre market by Power Capacity

The demand for datacentre services in India has gradually grown with the average power
capacity of a single datacentre facility increasing from less than 5 MW to over 10 MW in
the last five years. Multiple on-premise datacentre deployments of less than 2 MW have
also contributed to this growth. In terms of power capacity by facility type, purpose-built
dedicated datacentres dominate compared to on-premise datacentres.

All the states in India, except Mumbai are dependent on power supply from
government-owned utility companies. In Mumbai, private power suppliers namely, Tata
Power and Adani supplies power to datacentres.
Dependence on backup power generators is still high owing to power fluctuations in
the country across most states.

The country is observing an increased awareness in the adoption of renewable

procurement among operators. The installation of on-site solar power generation
sources is growing among service operators combined with off-site wind/solar power
supply sources.

India Datacentre Market Investment by Power Capacity 2019–2025 (MW)

CAGR 7.0%

465
420
360
310

2019 2021 2023 2025

Source: Arizton
470 INDIA- THE NEXT DATACENTRE HUB

9. Types of Outsourced Datacentres Services

Hosting Services: On-premises and cloud-hosting are carried out by datacentre

service providers for their public/ private sector customers.

Colocation Services: Customers own the IT infrastructure hosted in datacentres of the

service provider and is also involved in day-to-day management of the infrastructure
i.e. managed colocation.

Hybrid Services: Customers prefer a combination of hosting as well as colocation

services, where the end-to-end digital transformation of businesses is managed by
datacentre service provider.

10. Types of Colocation Datacentres Services

Colocation – Retail
It is a cost-effective colocation model, which is suitable for organizations with lower
computing requirements. It includes renting of a single rack or a smaller number of
racks to customers. Enterprises renting capacity of up to 250 kW comes under the retail
colocation category.

Pricing varies depending on the needs of customers and service provider’s capabilities.
In comparison to other matured regions the cost of retail colocation is economical in
India. However, the retail colocation pricing in countries such as Indonesia, Thailand,
Vietnam, and the Philippines is at par with India.

Retail Colocation Pricing34

Retail Colocation Pricing (per Rack per Month) – 1H2020

Country 3 kW 5 kW 7 kW

India $500-$750 $900–$1,200 $1,500-$1,800

Japan $700-$900 $1,050-$1,300 $1,550–$1,800

Singapore $750-$950 $1,100–$1,300 $1,700-$1,900

Hong Kong $800-$1,000 $1,200-$1,350 $1,900-$2,100

34
Arizton
71 INDIA- THE NEXT DATACENTRE HUB

Colocation - Wholesale
Renting a large datacentre of over 500 kW power capacity or the entire datacentre facility
to a single customer is termed as wholesale colocation. The wholesale colocation pricing
(>1 MW) is at least 10% more economical in India than other regional markets such as
Singapore, Hong Kong, and Japan. Colocation of over 500-kW power capacity in India
is ~16% more economical than other regional datacentre hubs such as of 1H2020.

Wholesale Colocation Pricing35

Colocation Pricing (per kW per Month) 1H2020

Hyper-scale Wholesale Retail Colocation
Country Colocation (>1 MW) Colocation (500 KW) (250 KW)

India $115–$140 $150–$190 $200–$230

Tokyo $128–$157 $179–$218 $227–$278

Singapore $138–$158 $175–$255 $230-$280

Hong Kong $170–$200 $230–$270 $300-$350

35
CBRE Asia Pacific Data Centre Trends (H1 2020)
72 INDIA- THE NEXT DATACENTRE HUB

11. List of Indicative Datacenter Investments in India announced in 2020

Investment/ Facility
Datacentre Location Project Active/ Expected
Power Capacity
Operators / Investor Status Operational Year
(MW)

Delhi Investment
Tamil Nadu & ₹7,000 Crore (~$950 Under
Yotta Infrastructure Uttar Pradesh mn) Chennai Construction 2021-2022
Investment: ₹4,000
Crore (~$ 550 mn)

Amazon Web Hyderabad Investment ₹ 20, 761 Announced 2022

Service (Telangana) Crore (~$2.77 bn)

NTT Global Data Multiple Investment ₹10,555

Announced 2020-2023
Centers (Netmagic) Locations Crore (~$1.39 bn)

Assam Government &

National Informatics Guwahati, Investment ₹350 Crore Announced 2023
Assam (~$45 million)
Centre (NIC)

Mumbai, Noida,
Total Capacity:
RackBank Telangana,
500 MW
Announced 2020-2025
Bangalore & Kochi

Mumbai,
CtrlS Maharashtra Mumbai - 300 MW
Announced 2021 or 2022
& Hyderabad, Hyderabad – 200 MW
Telangana

HDCI Data Chennai, Investment ₹2,800

Planned Not Applicable
Centre Holding Tamil Nadu Crore (~$380 mn)

Chennai, Investment ₹2,300

Adani Group Tamil Nadu Crore (~$315 mn)
Planned Not Applicable

ST Telemedia Tamil Nadu &

Tamil Nadu Investment
Not Applicable
Global Data Centre Maharashtra
₹1,500 Crore Planned
(~$205 mn)
Maharashtra - NA
Princeton Chennai, Investment ₹700 Planned Not Applicable
Digital Group Tamil Nadu Crore (~$95 mn)

Mantra Maharashtra &

NA Planned Not Applicable
Data Centres Tamil Nadu
473 INDIA- THE NEXT DATACENTRE HUB

12. Major Global Investors in Datacentres36

Estimated/
Organization Number of Year of
Investment Locations Projects Investment
($ million)

USA, Ireland,
Facebook* 13,000 Singapore, Sweden 30 2020-2025
& Denmark

Google* 4,450 Worldwide 9 2020-2022

Microsoft* 2,900 Worldwide 8 2020-2021

Digital Realty 2,000 Worldwide NA** 2020-2021

CyrusOne 2,000 USA & Europe 10 2020-2022

Equinix 1,900 Worldwide 30 2020-2021

GDS Services 1,630 China 17 2020-2021

Switch 710 USA 9 2020-2023

NTT*** 500 Worldwide 9 2020-2022

Vantage Data
Centers*** 440 USA & Europe 7 2020-2021

Note: The data provided in the table is last updated as of September 2020
*Google, Microsoft, and Facebook: Include only self-built datacentre investments
**Digital Realty is investing across 19 locations worldwide. However, it does not specify the number of datacentre projects they are
investing in each location
***NTT & Vantage Data Center: Their announced/planned investments range in billions of dollars, and the above table represents only
current investments. For instance, NTT India (Netmagic) planned investments of $2 billion in India over the next four years

Includes officially released data of under development and announced projects -

36

collected from Q1 2019 to Q3 2020 i.e. September 2020

74 INDIA- THE NEXT DATACENTRE HUB

RESEARCH METHODOLOGY
Collection of Data:

Through several primary and secondary data sources. Primary research comprised of
in-depth discussions and interviews with 40+ industry experts across datacentre and
cloud service providers; system integrators; telecommunication providers; IT and
support infrastructure providers; construction contractors and datacentre certification
authority. Secondary sources include a thorough study of market journals, press
releases, annual reports, and government and non-government agency websites.

Market Derivation

Datacentre market investments are segregated into two categories:

IT Infrastructure: IT Infrastructure spending on datacentres is calculated through the
sales revenues of infrastructure providers such as Dell Technologies, HPE, and Cisco on
an annual basis across regions and countries, worldwide.

Support Infrastructure: The spending on electrical and mechanical infrastructure as

well as general construction services is calculated through investments made on
greenfield, brownfield, and on-premise datacentres by enterprises (self-built),
hyper-scale (self-built), and colocation providers.

Key Considerations & Assumptions

In 2019, investments on over 460 datacentre projects were identified globally, which
covered the total investments on support infrastructure including electrical infrastructure,
mechanical infrastructure, and general construction services.

Investments are identified on yearly basis and not on a cumulative basis. In order to
forecast, historical trends and announcements related to future investments are taken into
consideration.
75 INDIA- THE NEXT DATACENTRE HUB

Datacentre cost models are used to segregate overall investments in datacentres into
electrical infrastructure, mechanical infrastructure, and general construction services. The
cost models differ based on the Uptime Institute Tier (I-IV) standard design of
datacentres. For instance, Tier III datacentre developments in developed countries such
as the US, the UK, Germany, Singapore, Japan, and Hong Kong can cost ~ $7-$8
million per MW, whereas Tier IV datacentre can range between $11 million and $13
million per MW
76 INDIA- THE NEXT DATACENTRE HUB

GLOSSARY AND ABBREVIATIONS

Glossary

Captive Datacentre (on-premises & dedicated): Public and private sector enterprises
directly invest in these facilities for internal business operations.

Colocation Datacentre: These structures are built to offer retail and wholesale colocation
services, which include cooling, power, network connectivity, and physical security, on
rent for enterprises.

Hyper-scale Datacentre: These structures are developed primarily by cloud/hyper-scale

datacentre operators such as Facebook, Google, Amazon Web Service, Microsoft, and
Alibaba to offer strong, scalable applications, and storage portfolio of services to
businesses. Also, datacentre development with power capacity over 15 MW is considered
as hyper-scale facilities in this report.

Uptime Institute: Uptime Institute created the datacentre Tier classification levels, which is
an international standard for datacentre performance. Its datacentre classifications are
divided into four Tiers (I-IV) that define the criteria for power, cooling, fault capabilities and
maintenance.

DATA CENTER TIER STANDARDS

Availability: Annual Downtime: Availability: Annual Downtime:

99.671% 28.8 hours 99.749% 22 hours

Single Delivery Path No Redundant

TIER 1 TIER 2
Single Delivery Minimum
of Power and Cooling Infrastructure Path of Power Redundancy based
& Cooling on Infrastructure

Availability: Annual Downtime: Availability: Annual Downtime:

99.995% 0.04 hours 99.982% 1.6 hours
TIER 4 TIER 3
2N+1 Redundancy N+1 Redundancy 72 Hours of
in Power & 96 Hours of in Power & Cooling Backup available
Cooling Infrastructure Backup available Infrastructure
77 INDIA- THE NEXT DATACENTRE HUB

LIST OF ABBREVIATIONS
MEA - Middle East and Africa
LATAM - Latin America
CAGR -
Compound Annual Growth Rate
APAC - Asia Pacific
ROI - Return on Investment
M&A - Mergers & Acquisitions
CAPEX - Capital Expenditure
OPEX - Operational Expenditure
MW - Megawatt
HDD - Hard Disk Drive
SSD - Solid State Drive
GbE - Gigabit Ethernet
VRLA - Valve Regulated Lead–Acid
PDU - Power Distribution Unit
ANZ - Australia & New Zealand
U - Unit (1.75 Inch)
OCP - Open Compute Project
AWS - Amazon Web Service
GDPR - General Data Protection Regulation
IIoT - Industrial Internet of Things
EB - Exabyte
PUE - Power Usage Effectiveness
DCIM - Data Center Infrastructure Management
SWF - Sovereign Wealth Fund
kWh - kilowatt-hour
DNS - Domain Name System
SSL - Secure Sockets Layer
CO2 - Carbon Dioxide
AR - Augmented Reality
VR - Virtual Reality
AI - Artificial Intelligence
ML - Machine Learning
GB - Gigabytes
OTT - Over the Top
BFSI - Banking Financial Services & Insurance
Km - Kilometer
MeitY - Ministry of Electronics and Information Technology
78 INDIA- THE NEXT DATACENTRE HUB

AUTHORS AND KEY CONTRIBUTORS

NASSCOM would sincerely thank and acknowledge the following organizations and
their representatives for their consistent enthusiasm, support and knowledge sharing
towards the creation of this report.

Acknowledgements

Anirban Chakraborty Rajan Pillay

Senior Marketing Manager, Pi Datacenters Global Head Agile Computing, Edge & Cloud
CoE, TCS
Amit Raj Singh
Head - Cloud Business (India), Wipro Rajesh Salian
Vice President Sales and Marketing
Deepak Kumar Jha Swegon Blue Box
Deputy General Manager
– AI Platform, NEC Corporation India Rohini Srivathsa (Dr.)
National Technology Officer (CTO)
Jay Burse Microsoft India
Director - Business Development
Prasa Infocom & Power Solutions Pvt. Ltd Sanjay Kuntal
DGM Data Centre Projects
Kunjumon Francis Sterling and Wilson Pvt Ltd
Head - Datacentre Solutions and Service (India),
Siemens Sharad Sanghi
Managing Director & CEO, NTT-Netmagic
Manoj Paul
Managing Director, GPX India Pvt Ltd. Sujit Janardanan
Head of Marketing (India), Google Cloud
Nandeshwar Kumar Singh
Senior Director - Business Development (Greater Sunil Gupta
India Zone), Uptime Institute CEO & Managing Partner
Yotta Infrastructure Solutions
Narendra Sen
CEO & Founder Vaibhav B. Patwardhan
RackBank Datacentres Private Limited Data Center Segment Manager (India)
ABB India Ltd
Nitesh Lakkad
Senior Solutions Architect, Wipro Vinod Natarajan
Chief Business Officer, NGBPS LIMITED
Raakesh Menon
Vice President – Cloud Business and Viren Wadhwa
Partnerships, Vodafone Idea Limited Director Marketing and Communications
ST Telemedia Global Data Centres India
Rahul Dhar
Country Director – Data Center, Microsoft India

Authors
Neha Jain - Senior Analyst – Research (IT Services, Mobility, MarTech, Datacentres)
Diksha Nerurkar – Lead – Market Intelligence, NASSCOM
Harish Sridharan – Manager, Datacentre Research, Arizton
79 INDIA- THE NEXT DATACENTRE HUB

ABOUT NASSCOM
NASSCOM is the industry association for the IT-BPM sector in India. A not-for-profit
organization funded by the industry, its objective is to build a growth led and sustainable
technology and business services sector in the country with over 3,000 members.
NASSCOM Research is the in-house research and analytics arm of NASSCOM
generating insights and driving thought leadership for today’s business leaders and
entrepreneurs to strengthen India’s position as a hub for digital technologies and
innovation.

Disclaimer
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inadequacies in the information contained herein, or for interpretations thereof. The material or information is not
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decision or taking any action that might affect any body’s personal finances or business, they should consult a
qualified professional adviser.

Use or reference of companies/third parties in the report is merely for the purpose of exemplifying the trends in the
industry and that no bias is intended towards any company. This report does not purport to represent the views of
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