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AdaniConneX’s first data centre will soon be operational in Mumbai

The conglomerate has made its move into the data centre market in time for India’s legislative pitch on data localisation.

Adani Group’s joint venture with EdgeConneX, AdaniConneX, will be setting up a data centre in Mumbai, according to a report in Economic Times. The company has identified six cities to set up data centres initially, the report added. The other cities are Noida, Chennai, Visakhapatnam, and Hyderabad.

The newly-incorporated subsidiary, Mumbai Data Centre Limited (MDCL), will be commencing its business operations soon, according to a disclosure filed by Adani Enterprises with the Bombay Stock Exchange.

“…Mumbai Data Center Limited (“MDCL”), on 4th February, 2022, with an Initial Authorized and Paid-Up Share Capital of Rs. 1,00,000/- each, to, interalia, undertake business to develop, operate, maintain, deal with data centers, Information Technology (IT) / Information Technology Enabled Services (ITES) / Cloud, providing services related thereto and to undertake activities associated with its infrastructure development including land acquisition & development for the said purpose,” read the disclosure.

Several businesses are now making the transition to cloud which will need to be facilitated by data centres. They will also need to comply with the local mandates like the Reserve Bank of India’s data localisation guidelines for payment companies. The recent budget (FY 2022-23) classified data centres as infrastructure assets, highlighting their role in propping up India’s data economy. The Data Protection Bill 2021 also stipulates that all sensitive and critical personal data must be stored in India and can only be transferred outside India under certain conditions.

What do we know about AdaniConneX?

The joint venture was first announced in February last year with a share of 50:50 in the new entity, as per a press release by EdgeConneX. The plan was to install a one gigawatt (GW) data centre capacity over the next decade. It was not revealed what kind of investment was being made in the operation.

AdaniConneX is focused on building a network of hyperscale data centres in India, and their development and construction has begun, said the press release. The group acquired land in Noida for the data centre from the Uttar Pradesh government whereas it partnered with Flipkart to set up its third data centre in Chennai, ET said in its report.

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Gautam Adani, Chairman of the Adani Group, had said that it was important to address the need for a reliable infrastructure to support Cloud, Content, Network, IoT, 5G, AI, and enterprise requirements, at the time of the announcement.

Who else is making a play for data centres?

Airtel announced an investment of Rs 5,000 crores by 2025 towards its data centre business, Nxtra by Airtel, according to a press release by the company. The telco said that the capital will be used to augment its network of hyperscale and edge data centres which includes new data centre parks in key metro cities.

Nxtra is targeting an installed capacity of over 400 MW on account of this investment. The subsidiary currently operates 10 large and 120 edge data centres across India and manages critical submarine landing stations.

Reliance has operationalised 10-megawatt capacity Jio-Azure cloud data centres in two cities, Jamnagar and Nagpur. It is onboarding the initial group of pilot customers and plans to expand its data centre capacity and offerings to a growing number of SMEs and startups over the coming quarters, the company said during its AGM.

How does TRAI plan to promote data centres?

The Telecom Regulatory Authority of India (TRAI) came up with a consultation paper recently to explore ways to set up a regulatory framework for setting up data centres.

Land, power, telecom and IT networks, and ease of doing business are four critical aspects for a data centre to thrive, and the policy framework should keep these factors in mind, TRAI recommended.

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“A country-wide data-centre-specific tax and duty incentive may be adopted to encourage investors to operate here.” — TRAI in consultation paper

TRAI proposed that the government’s fiscal incentives should be in the form of tax exemptions to promote data centres along the lines of several Indian states.

  • Offer fuel subsidies initially: “The establishment of dual power grid networks to ensure uninterrupted quality supply of electricity to the data centre is required considering the power deficiency situation that exists in various parts of the country,” as per the paper. The governments should also leverage solar and wind farms to supplement power sourcing. “Energy or duty tax may be exempted to benefit the industry in a situation where many outsourcing companies are experimenting with renewable energy for bundling or part-powering their units,” it concluded.

Some of the proposed non-fiscal measures are:

  • Specified timelines for clearance should exist to prevent delays.
  • 24×7 water supply, special provisions in building norms
  • Preference in public procurement
  • Providing power and internet facilities to edge DCs
  • Single-window approvals and permits for companies willing to establish captive firms
  • Exemption from inspections under factories, wages acts, etc.
  • Exemption from provisions of factories act; shops and commercial establishment act; labour act, etc.
  • Waiving of import restrictions and duties on essential Data Centre operational equipment.

Government incentives for data centres

An incentive scheme of Rs 12,000 crores was proposed by the Indian government to encourage companies to set up data centres across the country. The ET report said that the government is expecting an investment of ₹3 lakh crore, from domestic and international companies, in the next five years as a part of the hyper-scale data centre scheme.

The government is also planning to provide other incentives such as three percent to four percent of capital investment, along with real estate support and faster clearances.

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I cover several beats such as crypto, telecom, and OTT at MediaNama. I will be loitering at my local theatre and consuming movies by the dozen when I am off work.

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