Data Center Policy Framework Expected to be Approved by Cabinet, CIO News, AND CIO

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The Ministry of Information Technology, which plans to offer incentives worth up to Rs 15,000 crore under a National Data Center Policy, will soon submit it to Cabinet for approval, told ET senior government officials.

According to a draft policy, the government is considering investments of up to Rs 3 lakh crore in the data center ecosystem over the next five years.

“This will be the biggest investment an incentive program has attracted so far. It even exceeds the semiconductor policy in terms of expected investment,” an official said.

Of the Rs 15,000 crore corpus, a large portion is likely to be distributed as capital investment incentives, sources say.

For example, the Department of Computing plans to offer a 4-6% incentive on investment if purchased components – such as servers, server trays, server housings and others – come from units of Indian manufacture.

An additional incentive of up to 3% will be given for the use of renewable energy, a second official said.

“Data centers consume a lot of energy and therefore it is important that renewable energy is used as much as possible. In most cases however, heavier components such as racks and server trays require a constant supply of high voltage electricity. So, the incentive is to encourage the use of renewable energy wherever possible,” the official added.

In areas where it is not possible to generate the renewable energy needed to run the data center, the IT Department plans to encourage states to provide electricity at subsidized rates, said the manager.

The boom in data usage as well as the digital economy has catapulted the data center industry, which also expects to benefit greatly from official dictates that require certain types of data to be stored only in-country. .

For example, according to the latest mandate from the Indian Computer Emergency Response Team (Cert-In), companies are required to store consumer logs for five years. Similarly, the Data Protection Bill also provides that certain types of data are only stored in India.

India’s data center industry is expected to attract investments worth Rs 70,000 to Rs 72,000 crore over the next 5-10 years, driven by large enterprise groups and cloud service providers, according to an estimate by the rating agency Ind-Ra.

Already, large national conglomerates such as Reliance Industries, Bharti Airtel, Adani Group, Hiranandani Group and multinational corporations such as Microsoft, Alphabet Inc and Amazon Web Services have partnered with traditional data center players such as NTT, Sify, CtrlS, STT and others. to invest huge sums in data center space.

The budget had proposed including data centers and energy storage systems, including dense charging infrastructure and grid-scale battery systems, in the harmonized infrastructure list. This is intended to facilitate the availability of credit for digital infrastructure and clean energy storage.

In a 2020 draft of its data center policy, the IT Department had also suggested that the central government would strive to provide an “infrastructure” label to data centers so that investment in these units could span roads, railroads, ports and power.

The government is now likely to push state governments to recognize the label.

“As most investments will be led by private companies, we must do everything we can to facilitate more funds. We are also planning to introduce one-stop customs clearance for all necessary approvals for quick execution of projects,” an official said.

The 2020 draft also suggested that data centers be encouraged to set up their power generation units or be allowed to source power directly from power generation companies.

In addition, the IT Department can also encourage states to provide land for the construction of data centers at below-the-circle rates if purchased or leased, another official said.

In August last year, ET was the first to report on proposed incentives and targeted investment plans from the IT Department for setting up data centers across the country.

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