In a bid to attract data centre builders, Uttar Pradesh is readying a cost-competitive policy
“We want to prepare a favourable policy so that any company looking to build a data centre in north India prefers Noida. With the airport and film city in the pipeline, a separate policy for data centres will help attract investment. We have sought suggestions from industry experts,” said a UP government official.
The Uttar Pradesh government is formulating a policy to attract data centre builders to Noida, seeking to draw investments away from preferred destinations such as Mumbai, Bengaluru, Hyderabad and Chennai.
In a bid to be cost-competitive, the policy will include benefits such as uninterrupted power supply and permission to build without underground parking.
While there was no major data centre transaction in the National Capital Region before the lockdown, two transactions took place in the past two months and three companies have been in talks, market experts said.
DLF leased 360,000 square feet at the upcoming Noida IT Park to Singapore-based ST Telemedia Global Data Centres. Mumbai-based Hiranandani Group’s Yotta Infrastructure said it would set up a 20-acre data centre park in Greater Noida with an investment of Rs 7,000 crore.
India’s data centre capacity, as measured in terms of power load, is expected to almost triple to 1,078 MW by 2025 from 375 MW in H1 2020, presenting a $4.9 billion investment opportunity, Jones Lang LaSalle said in a report in September. Mumbai and Chennai will account for a 70% share of the capacity additions, JLL said.
“Data centres are a different asset class and cannot be built like an office space. There are a lot of permissions that need to be taken currently. A policy will formalise the process,” said Ankur Srivastava, chairman of GenReal Property Advisers in Gurgaon. “The developers would want to reduce the cost as buildings for data centres don’t require parking space and should not be of more than five floors,”
Daily data consumption rose 14% to an average of 308 petabytes (PB) after the lockdown period from an average of 270 PB in the period before Covid-19 restrictions were imposed.
There was a 12% rise in data consumption in Andhra Pradesh and Bihar, while there was a 7% increase in Maharashtra, which is the biggest data consumer.
According to Anarock, the top eight Indian cities are expected to add 10 million sq. ft. of data centre space in the next two to three years.
The massive digital push initiated by the pandemic has been lucrative for data centres, which can still deliver an annual rental yield of 10-14%.
“Powered by the transition to work-from-home arrangements during the lockdown, the country’s data centre industry became the backbone of the digital economy and ensured a level of business continuity and sustained large portions of the country’s education system. Given shifts in the economy, we will continue to see data consumption increase manifold for the foreseeable future,” said Rachit Mohan, India Head, Data Centre Advisory, JLL.