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Budget 2022: ‘Infra status to data centres could attract FDIs, ECBs, low-cost funds’

Budget 2022: The announcement will help the country's data centre industry to get access to long-tenure funds at lower costs, including foreign direct investment, said Sridhar Pinnapureddy, founder and chief executive of CtrlS Datacenters.

February 01, 2022 / 05:41 PM IST
Representational image.

Representational image.

The Indian data centre industry that witnessed unprecedented absorption of 102 megawatts of IT design power load during 2020, notching higher absorption than most key markets of Europe and America, could now attract huge foreign direct investment, long-tenured foreign funds at lower costs and external commercial borrowings thanks to the infrastructure status proposed to be conferred on the sector in the Union Budget-2022.

Sridhar Pinnapureddy, founder and chief executive of CtrlS Datacenters, a leading Indian data centres player, said, “Data centres being granted the infrastructure status… will help attract external commercial borrowings, access to long-tenure funds at lower costs, including foreign direct investment.”

Further, the CtrlS chief executive viewed that data centres were “poised to play a key role in shaping the future of Digital India” with the planned roll-out of digital universities, digital banks, digital rupee through blockchain, thrust on digital payments, and OFC deployment through Bharatnet across all villages, all of which will lead to an explosion of data across rural and urban areas.

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Finance Minister Nirmala Sitharaman on February 1, in her presentation of Union Budget-2022 proposed conferring the infrastructure status to data centres and energy storage systems, including dense charging infrastructure and grid-scale battery systems, hoping that the move will “facilitate credit availability for digital infrastructure and clean energy storage.”

Global real estate services firm JLL in its report last May estimated that the Indian data centre sector would require investments of $3.7 billion (approximately Rs 27,676 crore) over the next three years to fulfil the six-million square feet greenfield development opportunity for the industry.

“India’s data centre industry is expected to add 560 MW during 2021-23 leading to a real estate requirement of 6 mn sq ft,” said JLL’s Chief Economist and Head of Research, Samantak Das. “Rising demand is leading operators to pursue ambitious expansion plans, while some are adopting the acquisition route to enter Indian markets.”

The unprecedented growth in Indian data centres is largely attributed to longer-term trends of rising cloud adoption, increasing digitalisation and progressive legislation, leading to increased demand for colocation space nationwide.

Global investment management services firm Colliers India’s Managing Director (advisory services), Subhankar Mitra, viewed that the proposal to bring data centres into infrastructure category “is expected to boost the fintech and digital drive of the nation,” apart from helping in “promoting India as an attractive investment destination.”

Global property advisory services firm Knight Frank’s senior branch director at Hyderabad, Samson Arthur, said the infrastructure status to data centres “would make available preferential credit for this already fast-growing sector.”

Knight Frank in its December report said the Indian data centre market currently houses an estimated 445 MW of critical IT capacity in the seven cities of Mumbai, NCR, Bengaluru, Pune, Chennai, Hyderabad and Kolkata.

“India being one of the most populated countries in the world, rising mobile penetration is leading to a massive increase in data consumption along with a large and growing base of global users for digital mediums such as social media applications, IOT devices and OTT, as well as gaming platforms,” according to the Knight Frank report.

CR Sukumar is a senior journalist based in Hyderabad.
first published: Feb 1, 2022 05:41 pm