Context: ICRA Limited, Indian Credit Rating firm, has forecasted that India’s data center operational capacity will go up to 2,000-2,100 MW by March 2027, from over 1,150 MW in December 2024. This would require an investment of ₹40,000-45,000 crore in the next two years.
Relevance of the Topic: Mains: India’s Computing & AI infrastructure- Data centers; Government Initiatives
What are Data Centers?
- Data centers are highly specialised facilities designed to house computing systems and their related components, such as, physical hardware, servers, networking equipment and storage systems.
- Utility:
- Process, store, and distribute data for various applications and services, such as websites, cloud computing, and enterprise operations.
- Empower organisations to handle large volumes of data securely and efficiently, and enable cloud computing to function seamlessly.
Potential of Data Centers in India:
- India aims to become a global hub for AI innovation and data center development.
- Current capacity:
- India's data center capacity is approximately 1,255 MW at present (March 2025).
- India holds 20% of global data but only 3% of data center capacity.
- Expansion potential of data center in future, due to:
- Increasing digitalisation and data consumption.
- Rise in demand for AI and generative AI projects.
- Nationwide roll-out of 5G.
- Need for edge computing to allow data processing on devices.
- Data localisation initiatives (store data within National borders).
- Concentration of data center in India:
- About 95% of the existing data center capacity is in metros cities (Mumbai, Chennai and Hyderabad).
- Mumbai has >50% of current capacity due to its central location, reliable power and cable landing stations.
Government Initiatives in this Regard
1. Data Localisation Rules: India’s laws mandate that certain data be stored locally, such as:
- Reserve Bank of India's Directive (2018) mandates payment system providers to store entire payment data (transaction details, customer information and related data) within India.
- IRDAI (Maintenance of Insurance Records) Regulation, 2015 requires covered organisations to store insurance data within India.
- The draft Digital Personal Data Protection Rules focus on targeted data localisation, addressing children's online age verification challenges, and data protection.
- Digital Personal Data Protection Act permits cross-border data transfers to all countries, unless restricted by the Central Government by notification.
2. Digital India Mission:
- Digital India campaign launched in 2015, aims at the development of secure and stable digital infrastructure (including data centers), delivering government services digitally, and universal digital literacy.
3. IndiaAI Mission:
- The Rs 10,370 croreIndiaAI Mission aims to:
- establish a computing capacity of more than 10,000 GPUs.
- help develop foundational models with a capacity of more than 100 billion parameters trained on datasets covering major Indian languages for priority sectors like healthcare, agriculture, and governance.
- The idea is that if such an infrastructure exists in the country, start-ups could plug into it for developing AI systems.
- Of the total outlay, Rs 4,564 crore has been earmarked for building computing infrastructure.
Generative AI-led high computing requirements present a new wave of demand for data center capacity. Favourable regulatory policies coupled with an infrastructure status for the data center sector would support strong growth prospects in India.