Impact of “Infrastructure Status” for the DC Industry announced in the Union Budget 2022

Feb 03, 2022
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Over the past two years the country has been tested beyond its limits with Covid 19’s second wave and other natural calamities. The very nature of the data centre’s 24×7 mission critical business amplified those challenges even further, but providers have been able surpass all such challenges. We have been able to execute the business plans resulting in new launches and smooth functioning of the existing facilities.


The pandemic fast-tracked digital adoption across the world, including India for business that wished to remain functioning and later profitable. This increased the demand for flexibility regarding reliability, redundancy, resiliency, and scalability among third party data hosting services like colocation services to facilitate business continuity. While this coupled with factors like automation, AI, 5G etc. became the trends that supported the massive expansion and adoption of the data centre industry, the future is green. Sustainability has already become a central theme for a number of larger players, including STT GDC India, where it has now become a group level priority.


Advent of 5G network along with a growing submarine cable connectivity system, also affects the bandwidth and experience a DC provider can help the customers with. Beyond these factors, several merger and acquisitions of smaller players and consolidation of the industry is on the horizon, along with growth in edge computing and a sharp focus of infra providers shifting towards tier 3 & tier 4 cities.


2022 Budget & Beyond


The Union Budget 2022’s announcement on giving data centres and other energy hosting institutes infrastructure status, is an important initiatives to boost the digital ecosystem and infrastructure further in India. Announcement of various other initiatives like DESH-stack-e-portal, rolling out National digital health ecosystem, digital content for students, opening digital university, digitisation of land records etc. would also boost the digital demand and in in turn increasing demand for data centres.


Infrastructure status would allow data centre service providers easy and increased access to credit from national and international lenders and financing for longer tenure at competitive terms. Various new avenues and source of financing would now be available for data centre like pension funds, insurance companies etc. As constructing Data centre needs significant capital, longer tenure of capital at competitive rates would fasten building data centre infrastructure in India.


Further initiative to lay optical fibre infrastructure in rural areas will enhance demand for Edge Data centres.


Availability of stable and cost effective power is very important to ensure the cost effective operating model of data centres. The government’s impetus on solar power generation like PLI for solar module manufacturing and infrastructure status to energy storage system would position India as preferred location for DC operators to leverage green energy at competitive rates to meet carbon emission goals.


With this budget, the government of India has acknowledged data centre as key infrastructure for digital ecosystem which is a welcome stimulus for the data centre industry as a whole. While various state governments have been announcing data centre policies and incentives for data centre providers, we believe that this would fasten up rolling out national data centre policy.


As we head into the next financial year, STT GDC India aims to take its formidable spirit and dynamic outlook to its future agenda balanced between an agile approach and experience, as a thought leader in the industry. In terms of sustainability, the STT GDC Group recently released a global ESG report highlighting the measures across the world including our India faction, are adopting, to ensure sustainability as a core tenet of the business goals. Building on the momentum of growth in 2021, we have already laid down ambitious plans to double our capacity every 3-4 years for the next 10 years; while we have already started working on new greenfield facilities/expansions in Noida, Pune, Chennai, and planning for Mumbai, Kolkata, Hyderabad and other cities. The company is also evaluating expanding in Tier 2 cities beyond the 9 cities which we are already present. This is to cater to the growing demand of the customers for Edge sites.


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