Overview of Data Center and its Localisation




With 1.4 billion people, India is the second-largest country by population and the fifth-largest economy globally, with nominal GDP equivalent to $2.6 Trillion. The majority of India’s economy comprises service-oriented industries with particular expertise in the IT services. Indeed, with a growing population and focus on IT services, India’s need for Data center infrastructure is becoming more apparent. Overall, the Asia-Pacific region will account for half of the global data center market by 2025. Important emerging markets like India are driving this. Indeed, the Indian data center market is projected to multiply in the coming years, and global data center providers are starting to take notice. This is a direct result of the market’s high demand and a low supply of data center infrastructure. Furthermore, data center initiatives are being supported by the Government of India. Prime Minister Narendra Modi’s Digital India Initiative promotes more digital infrastructure and increased internet connectivity in India.

Data Centers

Data centers house the servers that transfer information to and from the devices while using the internet. These data centers require a specialized infrastructure in terms of the buildings in which they are housed. Data centers demands heavy investment as it needs an adequate network infrastructure to power them. Along with it, the energy consumption, and the cooling system also requires considerable investment to fulfil demand.

Data Center Location Selection Criteria

The selection criteria are mainly based upon five attributes- Availability of power, proximity to customers, communication infrastructure and accessibility.

Sr. No. Attribute Site Selection parameters Required parameters
1. Power
  • Power availability
  • Record of significant outage/quality of power
  • Power availability is a must with the dual power source from two different substations through two different paths.
  • No major outage, and power quality should be good.
2. Communication Infrastructure
  • Availability of dense optical fibre cable (OFC) network.
  • Availability of fibre connectivity from different service providers.
  • Diverse entrance paths for optical fibre cable
  • Necessary
  • Necessary
  • The entry should be from two diversified paths for better redundancy and higher uptime.
3 Accessibility
  • Availability of water supply
  • Availability of public transport
  • Proximity to Fire Station, Police Station, Petrol Pump, Hospital
  • Proximity to major traffic arteries
  • Ample water supply and drainage should be available for various purposes, including chillers;
  • The site should have basic transportation facilities nearby to facilitate workforce and material movement;
  • Emergency services should be nearby but not immediately adjacent; and
  • The site should be located away from high traffic areas.
4. Proximity
  • Proximity to airport or flight path
  • Proximity to the central metropolitan area
  • Proximity to a high crime area
  • Others
  • Not preferred
  • Not preferred
  • Not preferred
  • The site location should be located away from the valley, the bottom of the hill, industrial pollutants, sewerage, chemical plant etc.

Data Localization In India

Localization of data has emerged as a critical policy problem in India during the past decade. This is mainly due to anticipated economic advantages associated with processing Indian consumer data, as well as challenges in obtaining personal data for national security and law enforcement reasons. The Indian government proposed a data protection law in 2019 that is currently being discussed and examined by the Indian parliament. This law establishes the country’s first framework for data localization at the macroeconomic level. Several sectors of the Indian economy have already adopted more customized, sector-specific data localization procedures. For example, the telecommunications industry currently mandates the storage and processing of subscriber information locally and bans the export of subscriber account information. Recently, India’s national bank, the Reserve Bank of India, requires that all payment data be kept in India, even if it is processed elsewhere.

report prepared by the Committee of Experts under the leadership of Justice B. N. Srikrishna explains the government’s rationale for implementing data localization.. The paper explains in detail why it is necessary to localize personal data. The same group then drafted a legislative proposal based on its findings, dubbed as the Personal Data Protection Bill, in 2018. Based on this, the Indian government presented the 2019 bill in the Indian parliament. The Indian government has identified four specific goals for data localization:

  • ensuring that law enforcement has quicker and more accurate access to personal data
  • promoting economic development and job creation;
  • avoiding foreign monitoring; and
  • enhancing the enforcement of data protection legislation


India needs a persistent governmental push in the form of policies and infrastructure to stimulate data center demand. With the adoption of regulations such as the National E-commerce Policy and the Personal Data Protection Bill, Indian customers’ data would be stored inside the nation, increasing the demand for data centers. Additionally, large-scale, national programmes like ‘Make in India,’ ‘Digital India,’ and the Smart City Mission, among others, will boost data center demand.

The expanding e-commerce network in India will bolster the data center segment even more, as the industry increasingly needs assistance in maintaining its vast database. Another demand driver will be the government’s Smart City project, which aims to shape e-governance throughout the nation.

Additionally, the COVID-19 scenario will bolster the sector’s next wave of development. Most significantly, the plan to grant data centers the coveted ‘Infrastructure’ designation would elevate data centers on the radar screens of top global investors.



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