What does infrastructure status mean for the data centre industry

As the Union budget 2022 grants infrastructure status, the move is expected to offer the industry access to long-tenure funds at lower costs, including foreign direct investment.

India’s Finance Minister Nirmala Sitharaman on Tuesday announced that datacentre and energy storage systems will be given infrastructure status to provide easy financing.

Sitharaman also announced that an expert committee will be set up to suggest measures to help attract more investments. Measures will also be taken to step up private capital in the infrastructure sector, she said.

“datacentres and energy storage systems including dense charging infrastructure and grid-scale battery systems will be included in the harmonized list of infrastructure. This will facilitate credit availability for digital infrastructure and clean energy storage,” said Sitharaman.

According to a Nasscom report , investments in the datacentre market in India are expected to reach about $5 billion by 2025.

Industry stakeholders believe the budget announcement is a step in the right direction given its exponential growth and the potential for future growth.

This move is said to ensure better access to capital borrowings at a reduced rate since banks enjoy a relaxation in the maintenance of capital adequacy for infrastructure lending and will give a fillip to investment in the datacentre industry.

“Like Housing and Logistics, infrastructure status will provide the datacentre industry with several concessions and benefits and will help to raise funds not only from Indian financial institutions but also from international lenders, with easier terms,” said , Sunil Gupta CEO and Co-founder at Yotta Infrastructure.

Naveen Mishra , Sr. Director Analyst, Gartner said, “Infrastructure status to datacentres will enable delivering on the PM’s vision of Digital India. It can demonstrate concrete long-term ROI for global/Indian investors providing better funding for real estate, power and storage systems- three critical components for operating a datacentre.”

Public cloud services run on datacentres and this announcement has the impetus to realize and fuel the $16 billion projected public cloud market by 2025, Mishra believes.

“This announcement will enable concerted efforts on multiple fronts, including 5G rollout, infrastructure development and policy reforms and will help in creation of a wider and stronger digital ecosystem in India,” said Sumit Mukhija , CEO, STT GDC 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 will lead to explosion of data across rural, urban areas and hence data centres are poised to play a key role in shaping the future of Digital India," said Sridhar Pinnapureddy, Founder and CEO, CtrlS datacentres.

The budget also accords infrastructure status to energy storage systems, and provides additional incentives of 19500 crores for setting up integrated solar module units to meet ambitious target 280 GW of solar power.

"Growing energy costs globally can be mitigated with -- Focus on Green Clean energy and energy storage as infrastructure will make India a location that can build the backend to the data centre industry even better. This helps set the stage to make India a data centre Hub," Nikhil Rathi, CEO and Founder of Web Werks data centres.

According to JLL India, the Indian DC industry is expected to more than double to 1007 MW by 2023 from its existing capacity of 447MW.

As datacentres consume a lot of energy, the move towards clean energy storage is also welcomed.

“Optimistically, I hope that soon datecenters will also get the official status of essential services. This highlights the government’s commitment towards green energy, sustainable development and climate change initiatives”, said Sharad Sanghi , Managing Director NTT Ltd in India.

Given the recent progress on the Personal Data Protection Bill 2019, it would be nice to have a clear framework on the hosting of data on third-party data centres and related incentive schemes, Gupta pointed out.

“Additionally, incentives linked with quality certifications of datacentres would also have been welcomed as this would have spurred the development of world-class digital infrastructure in India,” he maintained.

Source : https://cio.economictimes.indiatimes.com/news/data-center/what-does-infrastructure-status-mean-for-the-datacenter-industry/89287640