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Karnataka: Data center destination of choice!

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By Prashant Goyal, Senior Director & Head Data Center Solutions, Advisory and Transactions Services, CBRE India

India is one of the most exciting countries for the Data Center (DC) market. Deep internet penetration and e-commerce setup coupled with being a preferred and leading outsourcing hub for data processing – all work in favor of the country.

The growing importance of smart technologies, IoT-powered devices, Big Data, Industry 4.0, 5G, and cloud computing has led to Data Centres taking on a more prominent role in businesses in recent times. The rising data consumption patterns witnessed after the COVID-19 outbreak have underscored the growth potential of this emerging segment.

India is the second-fastest-growing digital economy; anticipated to double its IT and communications sector by 2025 – contributing around $ 55-435 billion to the overall GDP. The surge in data usage over the last year, increasing automated demand, changing demographic patterns, and increased level of remote work are further contributory factors to the revival of the segment. With the official diktats like that by Cert-In (Indian Computer Emergency Response Team) that requires organizations to store data for a minimum of five years, the industry has got another fillip for it to flourish.

Similarly, the proposed Data Protection Bill also mandates certain kinds of data that need to be stored within the country, and an earlier announcement about classifying DCs as infrastructure, facilitates credit access and funding. The heightened need for DCs
The GoI recently announced an investment of Rs 3 lakh crore in the data center ecosystem over the next five years. Further, the Cabinet cleared the policy wherein states like Karnataka, Maharashtra, Uttar Pradesh, West Bengal, Tamil Nadu, and Telangana will have an exclusive policy for the sector.

Now comes the part wherein states need to play the role of pied piper! In the entire hullabaloo of attracting investors to the state and uplifting its economy, Karnataka is emerging as the premium DC destination in India. With the DC policy in force, Karnataka is anticipated to lead as one of the top digital economies in the country.

Several factors, including technology hub, strategic location, power surplus, skilled talent, industrial growth, favorable policies, and low environmental risk, endorse Karnataka as a premium DC destination. Further, the state is already home to 44% of the country’s R&D centers, other government sops like power tariff concession, land subsidies, incentives on investments, and exemption on stamp duty, are likely to attract DCs in the state.

The state has also ranked #1 in Niti Aayog’s India Innovation Index in 2019 and 2020. Additionally, Karnataka Digital Economy Mission which aims to create one million jobs by 2025 and targets US$ 150 billion in IT exports, would bolster demand for digitalization and data storage requirements in the state, particularly in Bangalore. With India’s Silicon Valley (Bangalore) hosting the largest office market in the country – along with being a part of GoI’s smart City Mission; the state/city can be expected to see huge traction for the building of new data centers.

Urban cities: future hubs of data centers
Bangalore is fast emerging as ‘the destination’ for hyper-scale DCs. Reason? Bangalore has ~100 MW of DC capacity, the second largest in India and the city is the second-most preferred technology destination in APAC. Moreover, Bangalore is designated among the top 30 start-up ecosystems globally.

Further, Bangalore is one of the least active seismic zones and has low susceptibility to other natural hazards and disasters. Given it is a non-coastal city and thus protected from cyclones as well. There is no denying that these data centers are consistently growing in size and number—a pace that is not likely to reduce in the foreseeable future. When it comes to the placement of these ‘digital warehouses’, the criteria for locations are equally consistent with new sites often placed out in rural or suburban cities.

The location of a DC has an impact on the quality of service that the facility can provide to its customers. For instance, connectivity is best when it is in the proximity of the user. What needs to be understood here is that when data centers are in close geographic proximity to Internet Exchanges, or peering points, the organizations using them will benefit from low latency and multiply redundant bandwidth.

A sound data center infrastructure should be envisioned not just to cater to an organization’s current workload – but should also to support potential business expansion needs, and periodic upgrades to infra demand. This encompasses key principles such as site location, building selection, floor layout, electrical system design, mechanical design, and the concept of modularity that enables the facility to evolve and adapt – with minimum dependencies on renovation.

Further, data centers should be built to withstand the local weather. Natural disasters like floods and tsunamis happen but at the end of the day, your servers should continue with as little interruption as possible. Bangalore is located in one of the least active seismic zones. Given Bangalore is a non- coastal city, it is thus protected from cyclones.

It is usually advisable that buildings with mixed-use planning can become more applicable to providing people with a wider array of services that can benefit from the other’s proximity. Before investing in setting up data centers in a city, businesses should look for data center providers that have combined lower-cost availability of ample space and power for hyper-efficient data centers with the availability of broad and rich connectivity – a fiber that digital businesses need.

In the coming years, buoyed by improved stakeholder sentiments, sustained occupier interest, an improving talent base, and its intrinsic strengths as a pioneering hub for technology, R&D, and shared services platforms will continue to safeguard the state’s position as a premium DC destination.

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