Under the corridors in the engines of Digital India

IIn a remote area of ​​Greater Noida, Uttar Pradesh, an electricity substation – spread over 10,000 square meters and surrounded by walkers – hums. Its purpose: to provide a dedicated and uninterrupted stream of electricity to a 60 meter high building. This is ND1, Yotta Infrastructure’s data center in the National Capital Region, one of the many campuses being built around cities like Delhi, Mumbai, Chennai, Hyderabad and most recently Visakhapatnam in Andhra Pradesh.

Yotta’s data center is medium-sized compared to the latest projects announced, but even on this scale, workers appear like pins on top-floor scaffolding on ND2, with a similar tower being built right next to the first one, which is already operational. ND2 isn’t the only one – four others are under construction.

Also read: What will AI power data centers? , Explained

Data centers are the engines of the digital economy. Like any other engine, they’re fast – inside a server room, rows of metal cages stretch over 1,000 square metres. Hidden behind metal cages are servers for everyone from small companies to big tech companies: some choose to rent a building to house their gear in racks, while others ask companies like Yota to take care of the process from start to finish.

India’s data center industry is growing rapidly. In 2019, its installed power capacity was just under 650 MW. This has now more than doubled to 1.4 GW, according to estimates by credit rating agency S&P. If all the announced projects are completed on time it will reach 2 GW by 2028.

Then there’s the biggest part of this building: the hyperscaler. Almost every commercial data center in India has entire floors turned over to one of the four or five technology companies that handle most of the Internet’s back-end. The same is the case for ND1, where Yotta tour guides and a high-powered head of security are usually not granted access to the hyperscaler’s floor.

Can the guide tell us who is a hyperscaler? “No, we can’t disclose that” is the quick response. But there is not much left to the imagination. “You certainly know them.” Companies that rent an entire floor of this type of data center facility are typically Amazon Web Services, Meta, Microsoft, and Google.

The size of the premises does not match the number of people working in it. There are only a few dozen people on campus at any given time – there are three shifts throughout the day. To prevent the machines from overheating, large chillers installed on the roof funnels provide cool air. The building uses a 3.5 ton lift that moves up and down at a snail’s pace so that sensitive equipment on its way to the server room is not damaged.

Deep underground – although visitors are not told where – thick pipes carry cables from every telecom operator and Internet service provider in India. They deliver requests and data to millions of people across the country. They also provide a link to cable landing stations on India’s coasts, connecting data centers to Internet users and the backbone of the Internet – sub-sea cables.

Driving Data and Real Estate

The data center industry is different from other technology firms or electronics manufacturing plants. The companies running these buildings do not need a huge ecosystem of suppliers and firms around them. In fact, they prefer to avoid it.

Surjit Chatterjee is the India Data Center Head at CapitaLand, a Singapore-headquartered company that is setting up and operating multiple assets across India. “There should be no schools, fire, police, malls… there are very few people moving in and out of the data center; it is a mechanical building,” he said in an interview during a visit to Delhi in early November.

Mumbai-based Chatterjee has been in the business for more than two decades. It is as much a real estate business as it is a tech business or power business – CapitaLand builds and operates IT parks and residential properties. While Chatterjee refers to his realm as an “asset class,” the data center firms buying dedicated capacity there refer to the tech firms as “tenants,” in real-estate speak.

This is a dream asset class for the real estate business – land for data centers should be located practically in the middle and the state is keen to attract them, with some dangling subsidies on the polar opposite of prime real estate. Build-out is also quick. “From the moment we get approval, we are ready in 28 to 30 months,” he says. Power revenues are an attraction for distribution companies in states that have developed power infrastructure.

Most of the growth is being driven by spending by the main US players, whose vast global infrastructure runs much of the Internet. “Today, up to 70% of the revenue in the country is generated by hyperscalers,” says Chatterjee. While Google, Amazon Web Services, Meta and Microsoft have discreetly bought space in data centers run by dedicated players like Yota and CapitaLand, they have also announced data centers that they will build just for themselves.

In October, Google announced an “AI-powered data center in Visakhapatnam” with an investment of ₹87,520 crore. The Adani Group subsidiary and Bharti Airtel will support the roll-out. Amazon Web Services has committed over ₹1 lakh crore in Maharashtra alone. Microsoft announced an investment of over ₹25,000 crore in data centers in India in January – the company was appointing a personal real estate lawyer to every state and union territory in the country, looking for land wherever they could.

Banks and finance companies spend extensively on data centers due to the sensitivity and importance of handling money, and this accounts for a large portion of data center revenues.

powered by power

Data center power draw has been the subject of scrutiny around the world. The industry also has a measure – PUE (Power Usage Effectiveness) – to ensure that full advantage is taken of the power supplied to them.

India has suffered because the tropical climate means data centers have to spend more money on cooling and reliable power supplies are not always available. Hyperscalers’ data centers are also climbing as AI requires higher “rack density,” or more hardware that packs more power into each shelf.

In Mumbai and Chennai, the data centers are able to ensure reliable power supply. At 2-3 GW capacity, the industry’s contribution is less than 1% of India’s total installed power capacity.

The United States, which has 44% of the world’s data centers, has an installed capacity of 25 gigawatts, which McKinsey Research indicates will more than triple by 2030. This means that for a quarter of the country’s population, India’s data center consumption is a dime a dozen.

“Data centers are not dependent on local distribution in a city; they directly source their spare speeder (own substation),” Sunil Gupta, founder and CEO of Yotta, says over Zoom from Mumbai. He says that in Mumbai and Delhi, where Yotta’s data centers are located, power supply was not an issue in recent years.

In some instances of power outages, it didn’t last more than about half an hour, during which time the battery backup was able to keep things running without interruption. Failing this, data centers have a separate building with a diesel generator – like the one at the Greater Noida campus – which can come into play and keep the space running for a few hours.

Yotta’s Delhi data center is not fully populated or built out, which means its power consumption is nowhere near its capacity. Representatives declined to say exactly how much scope there was. But once AI gear like graphics processing units (GPUs) come into play, consumption is sure to increase.

“For a typical cloud (set-up), which was running on CPUs (central processing units) like data centres, we were fine with 6 to 8 kilowatt racks to run a typical platform,” says Gupta. “With GPUs, the minimum power per rack is 50 kW and can even go up to 150-200 kW.”

The IndiaAI Mission of the Ministry of Electronics and Information Technology (MeitY) is providing subsidized access to Nvidia’s GPUs to AI researchers through providers like Yotta.

what lies ahead

With investment growing rapidly and demand showing no signs of slowing down, MeitY has not announced any special subsidies or discounts for data centres. Hyperscalers and Indian companies are investing billions of dollars in building Indian data centres, an industry estimated at $30 billion over the next two years.

In 2020, MeitY introduced a draft data center policy, but it was never finalized. Since most of the clearances required to build data centers are in the hands of the states, the central government has recommended single-window facilities for better coordination and permissions by the states only.

The states did not wait. Uttar Pradesh, Tamil Nadu, Maharashtra and Karnataka already have their own data center policies, encouraging hyperscalers to set up their own facilities. “States are competing with each other to attract data center investment,” says Gupta. These states, he says, are updating their building codes to accommodate the specific needs of data centers (reduced parking requirements, an adjusted floor-to-ceiling height regulation, and sweetener subsidies for facilities with good PUE).

Another force stimulating demand is the looming threat of data localization mandates. Since 2016, the central government has attempted to push companies to store Indian users’ data locally. Storage costs for data centers based in the country have been historically high, but with Singapore (which has punched its weight in the data center industry) losing ground and the Digital Personal Data Protection Act, 2023 allowing the government to restrict foreign jurisdictions from holding data, the industry is already preparing.

Tech companies are also taking advantage of the fact that China’s data center industry is largely cut off from the rest of the world. In early November, Microsoft announced that it would allow Indian enterprise users to have their AI queries processed entirely in India. As India’s undersea cable ecosystem is also growing – with capacity exceeding demand – partly due to the existence of a growing number of data centres, Gupta says, “Vizag is just a cable away from Singapore and Malaysia.”

This boom could reduce the industry’s dependence on just two centers – Mumbai and Chennai – and expand it to places like Visakhapatnam. In terms of demand also, Mumbai has half the share in the data center market. “The city is a hub of hyperscalers and is the financial capital of the country,” says Chatterjee.

“Up to 70% of the market is between these two states,” he says, referring to Maharashtra and Tamil Nadu. He adds that the boom is just beginning. “AI is yet to fully penetrate India.”

aroon.dep@thehindu.co.in