India is witnessing a transition from an emerging to a developed market economy and digital is slated to play a key role in this journey. Digital is not only catalysing economic growth across all sectors and sub-sectors, but also forms the bedrock for providing better services to citizens, enabling social and financial inclusion, enhancing productivity and helping create a connected ecosystem. The size of the digital economy in India is estimated to grow from $ 200 billion in 2017-18 to a staggering $ 1 trillion by 2025.

With over a billion mobile phones and more than 700 million internet subscribers, India has also witnessed an exponential growth in digital-commerce, digital entertainment and use of social media. India’s mobile data consumption is already the highest in the world and is constantly increasing.

The size of the digital population in India and the growth trajectory of digital economy necessitates a strong growth of Data Centres, which has the potential to fulfil the growing demands of the country. Indian Data Centre market has seen tremendous growth in the past decade, riding on the explosion of data through smartphones, social networking sites, ecommerce, digital entertainment, digital education, digital payments and many other digital businesses / services. This growth in data is further stimulated by adoption of emerging technologies such as quantum computing, artificial intelligence, internet of things etc. This has been supported by various efforts of government in forms of various enablement for the sector.

Need for Data Centre infrastructure within the boundaries of the country is further necessitated by the data localization provisions of proposed Data Protection Act and for protection of the digital sovereignty of the country in an increasingly connected world. India also offers advantages of having a favourable geographical location on the world map, availability of economic resources, established global connectivity through submarine cables, easy and cost-effective access power and readily available skilled manpower provides, enabling the nation to become a global Data Centre hub.

DRAFT FOR DISCUSSION

Data Centre Policy 2020

This need for Data Centre infrastructure in the country already opens up a potential opportunity for investments of the order of USD 4.9 billion by 2025, which could be further increased given we progress in the direction of becoming a Data Centre location of choice for global players. Currently, as per various estimates, India has around 375 MW installed power capacity for Data Centre and as per projections, this may grow to three time by 2025. This policy intends to accelerate the projected Data Centre growth and investments in the sector.

While the Data Centre sector is witnessing growth in the country, there are known impediments to its growth such as lack of infrastructure or Industry status of the Data Centres, complex clearance processes, time consuming approvals, high cost of power, lack of published standards, absence of specialised building norms for building the Data Centres, submarine cable network connectivity limited to few states and high cost of capital and operational expenditure etc. This policy aims to offset these challenges in order to accelerate the current pace of growth and propel India in becoming a global Data Centre hub.

This document lays out a policy framework including various structural / regulatory interventions, investment promotion in the sector, possible Incentivization mechanisms along with the institutional mechanism required for the governance. The policy framework also seeks to strengthen the recently announced “Atmanirbhar Bharat” initiative by identifying possible opportunities of manufacturing of Data Centre equipment (IT as well as non-IT) in the country. It also identifies possible areas of participation by MSMEs and Start-ups.

The policy measures, as mentioned in the document, are applicable for Data Centre park developers/Data Centre operators as well as the allied ecosystem of Data Centre sector.

Lastly,this policy framework shall be followed by a detailed scheme with implementation guideline document providing the particulars of various fiscal and non-fiscal incentives to be provided to the sector by the Central and State Government.