Data localisation as the root cause of the Indian data centre market's explosive growth, by Abigail Opiah.
India is set to bear witness to a rapid growth in its data centre market as enterprises and key hyperscale players privately and publicly across the globe add the country onto their investment radars.
The key theme identified that is currently driving growth across Asia-Pacific is the explosive digital needs of emerging economies with huge populations such as China, India, and Indonesia.
India is the second-largest market for data centre infrastructure and second-fastest-growing market in Asia/Pacific after China.
India's GDP was worth $2597.5bn in 2017, representing 4.19% of the world economy, and averaged $545.8bn from 1960 to 2017. Of the country's over 1.3 billion population, 500 million of the Indian population are online users according to Narendra Sen, Founder and CEO of RackBank Datacenters.
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The local market is dominated by four southern cities: Mumbai, Chennai, Bengaluru (formerly Bangalore) and Hyderabad who collectively represent more than 74% of m2 space at the end of 2018 and will sustain a similar percentage share through to the end of 2020, according to BroadGroup's latest Data Centres India report published in February 2019.
Data localisation impact
The report also highlighted the fact that 70% of the countries data is stored outside India, but new legislation will attempt to reverse that using data localisation laws already being used in Germany and Australia.
Market capacity in terms of raised floor space (m2) is forecast to grow rapidly by 22% in 2019 and a further 49% by the end of 2020, according to the findings.
Teddy Miller, Analyst at 451 Research said that uneven development and a lack of fibre and power infrastructure across the country has led to 84% of Indiaâ€™s multi-tenant data centre supply being concentrated in the top five markets in the country (Mumbai, New Delhi, Bangalore, Chennai and Pune).
"Mumbai alone accounts for a third of overall supply, and Pune (8% of the market) mostly serves as a low-cost alternative destination to the country's financial heart," said Miller.
"2018 saw Mumbai offer over a total of one million operational square feet, as the city's top providers added large amounts of capacity to satisfy the demands of global hyperscalers.
The coming data localisation regulations mean that cloud, online content and financial services demand for footprint in Mumbai is expected to accelerate.
"Chennai, with its numerous subsea cable connections to the broader APAC region, has emerged in the last couple of years as a popular secondary location for hyperscalers seeking to achieve in-country geographic diversity.
Overall, data localisation seems to have accelerated the organic secular trend of international hyperscale cloud, IT services and online content players developing more data centre infrastructure in India to better serve the country's rapidly growing local enterprise end user base."
He also added that the confluence of regulations and relative undersupply has forced data centre operators all over the country to scale their investment strategies and adopt more international, modular construction methods, and that those who have managed to do so have already won fairly large deals.
However, this is not new news.
In 2013, the Hitachi Energy Efficiency in India Data Centres present trends and future opportunities' report declared that India is bound to witness a growth in data centre operations owing to the strong demand for IT services from both domestic and international market.
Comprising IaaS, PaaS and ISaaS, the cloud computing market in India is well on its way to reach $1.02bn revenue by 2021 according to 451 Research Market Monitor.
The firm forecasted continued growth for the cloud computing-as-a-service market, with a CAGR of 25% over the next four years as digital transformation takes hold in India and more businesses start outsourcing their IT infrastructure.
Who is already moving into India in 2019
Global integrated infrastructure players Adani Group broke ground for the Data Centre and Technology Park project in Andhra Pradesh, which was announced in February as it signed a memorandum of understanding with the state government to build three 1GW data centres at the beginning of the year.
This year also, Colt Data Centre Services announced its entry into India by buying a huge chunk of land in Mumbai, with plans to build a 100MW IT hyperscale data centre facility.
CtrlS Datacenters confirmed plans to build three new facilities in the country.
Mumbai is already the hub for facilities deployment by major companies such as AWS, Microsoft, Alibaba, and Google.
Most data centre development has taken place in southern India and the cities of Bengaluru, Chennai, Hyderabad and Mumbai will collectively represent around 79% of all m2 space by the end of 2020.
Mumbai - a megacity - hosts the largest in space and power and has a number of cable landing stations.
Sumit Mukhija, CEO STTelemedia GDC India revealed that the company has well defined expansion plans in all major cities in India and intend to increase its designed capacity to more than 200MW IT load in the next 3-4 years with investments of more than $1bn.
"India is going through a digital transformation.
It is disruptive, it is real, and it is well embraced by enterprises and aggressively backed by government through popular initiatives like the GST reforms, Smart cities, Rupay, UID and various inclusive citizen services etc.," he said.
"These are further fuelled by the boom in fintech and ecommerce and now AI and IoT are knocking the doors as well.
Cloud computing is one of the most disruptive forces in the digital age impacting IT strategy and expenditure," he added."For all enterprises, it is no longer about "why cloud"; it is about "when" and "at what scale" and in fact many of them are adopting a cloud-first strategy."
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