Union Finance Minister Nirmala Sitharaman on February 1 said data centres and energy storage systems have been granted infra status, enabling companies access to long-term financing and lower interest cost.
Benefits of infra status
- The grant of infra status to the data centre industry has led to expectations of rapid growth on the back of a sizeable flow of foreign investment & private capital.
- It will allow better access to capital borrowings at a reduced rate. It will give them access to cheaper and a wider pool capital over the long-term basis.
- The decision has also raised hopes of acceleration in digital biz which generate a large quantum of data.
- India’s geographic location & favourable policies are expected to make the country a hub for data centres catering to Southeast Asia in the next 5 yrs.
- As per one expert, India has one of the lowest per capita data centre capacities. This was largely due to limited long-term financing options and lead time required for availing all regulatory clearances. With the infrastructure status, this should be resolved to a large extent.
Causes of growing data business
- Expansion in the data centre business is coming on the back of growing digital penetration and the adoption of Cloud.
- According to an estimate, the data centre industry capacity is expected to double from 499 Mw in the first half of 2021 to 1,008 Mw in 2023. Increasing optic fibre network and 5G spectrum allocation would mean higher digital push, in turn increasing real estate demand.
Data centre initiatives in investments in India
- Reliance Jio is planning a 200-MW data centre campus with $950-million investment outlay in Delhi-NCR.
- In 2019, the Adani Group had announced a 70,000-crore investment in this asset class, while the Hiranandani Group under Yotta Infrastructure had plans of investing about15,000 crore by 2026.
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