cabinet: data center policy framework ready; see you soon for the approval of the cabinet

New Delhi: the Ministry of Informationwhich plans to offer incentives worth up to Rs 15,000 crore under national policy framework for data centersI will take it soon to cabinet for approval, senior government officials told ET.

According to a draft of the policy, the government is looking at investments of up to Rs 3 lakh crore in data center ecosystem over the next five years.

“This will be the largest investment any incentive scheme has attracted so far. It even surpasses the semiconductor policy in terms of expected investment, ”said an official.

Of the Rs 15,000 crore corpus, a major portion will likely be distributed as incentives for capital investmentsaccording to sources.

For example, the IT department plans to provide a 4-6% investment incentive if the purchased components – such as servers, server trays, server housing units and others – come from Indian manufacturing units.

An additional incentive of up to 3% will be provided for the use of renewable energy, a second official said.

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“Data centers consume a lot of energy and, therefore, it is important to use renewable energy as much as possible. In most cases, however, heavier components such as server racks and trays require a constant supply of high voltage electricity. So, the incentive is to encourage the use of renewable energy wherever possible, “the official added.

In areas where the renewable energy needed to run the data center cannot be generated, the IT department plans to encourage states to provide subsidized electricity, the official said.

The boom in data usage and the digital economy has catapulted the data center industry, which also expects a significant benefit from official dictates that certain types of data be stored only within the country.

For example, according to the latest mandate of the Indian Computer Emergency Response Team (Cert-In), companies are required to keep consumer records for five years. Likewise, the proposed data protection law also mandates the storage of certain types of data only in India.

According to an estimate by the rating agency Ind-Ra, the Indian data center industry will attract investments worth Rs 70,000-Rs 72,000 crore over the next 5-10 years, led by large corporate groups and cloud service providers.

Yep, major domestic conglomerates like

The Adani Group, the Hiranandani Group and multinational companies such as Microsoft, Alphabet Inc and Amazon Web Services have joined with traditional data center operators such as NTT, Sify, CtrlS, STT and others to invest large sums in data center space.

The budget proposed to include data centers and energy storage systems, including dense charging infrastructure and network-scale battery systems, in the harmonized list of infrastructures. This is intended to facilitate the availability of credit for digital infrastructure and clean energy storage.

In a 2020 draft of its data center policy, the IT ministry also suggested that the central government would take steps to provide “infrastructure” tags for data centers so that investment in these units could be along the lines. of roads, railways, ports and power.

The government is now likely to push state governments to recognize the label.

“Since most of the investments will be led by private companies, we need to do everything possible to facilitate more funds. We also plan to introduce single-window authorization for all approvals needed for a quick turnaround of projects, ”an official said.

The 2020 draft also suggested that data centers were encouraged to install their own power generation units or be allowed to source power directly from power generation companies.

Additionally, the IT ministry could also encourage states to provide land for data center construction at lower-than-circular rates in case it is bought or leased, another official said.

In August last year,
ET was the first to report on the incentives proposed and on the targeted investment plans of the Ministry of Information for the creation of data centers throughout the country.