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MeitY’s Draft On A Data Centre Policy Is Asking For Your Suggestions

MeitY’s Draft On A Data Centre Policy Is Asking For Your Suggestions

Kashyap Raibagi
MeitY’s Draft On A Data Centre Policy Is Asking For Your Suggestions

The Ministry of Electronics and Information Technology (MeitY) has released a draft for Data Centre Policy to benefit data centre park developers, data centre operators and the allied ecosystem.

The policy has been drafted with a vision to make India a global data centre hub, promote investment in the sector, propel digital economy growth, enable provisioning of trusted hosting infrastructure, and facilitate the state-of-the-art service delivery to citizens. For this, the ministry is encouraging industry experts, public policy professionals as well as students to provide inputs and feedback on the draft before Nov 20, 2020.

Currently, the draft policy has put out well-defined aims and objectives that will ensure sustainable and trusted data centre capacity in the country and strengthen India’s position as one of the most favourable countries for data centres through incentives and investments in manufacturing and R&D.

To achieve the objectives, the draft policy defines five main strategies — enabling ease of doing business, enabling a favourable ecosystem, setting up economic zones for data centres, promoting indigenous technology development and research, and creating an institutional mechanism for policy governance.



Growing Digitalisation Demands More Data Centres in India

With India host to over a billion mobile phones and more than 700 million internet users, the size of the digital economy is predicted to grow from $200 billion in 2017-18 to a staggering $1 trillion by 2025.

The Data Centre policy draft states that the size of the digital population in India and the growth trajectory of the digital economy necessitates a strong growth of Data Centres, which has the potential to fulfil the growing demands of the country.

Also, the need for Data Centre infrastructure within the boundaries of the country is further necessitated by the data localisation provisions of the proposed Data Protection Act and for protection of the digital sovereignty of the country in an increasingly connected world.

As a matter of fact, according to a report, India’s data centre capacity is predicted to triple, growing from 375 MW in H1 2020 to 1,078 MW by 2025, as an additional 9.3 million sq ft area will be developed for data centres in India. This presents a $4.9 billion investment opportunity, according to the real estate company.

Added Advantage in the AI Value Chain

The AI value chain consists of five stages: data collection, data storage, data preparation, algorithm training and application development. Different countries participate at different stages of the value chain depending on the different geographical and economic advantages they have.


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While the US and China participate in all the stages, they outsource many tasks to reduce costs. For instance, data preparation that consists of data labelling is outsourced to countries with cheaper labour costs. The countries with which big economies like the US or China collaborate in the different stages of the AI value chain are defining a new kind of geopolitics in today’s digital world. 

India has an artificial intelligence industry that is valued at $6.4 billion as of July-August 2020 and plans to become an ‘AI garage’, by specialising in applications specific to developing countries. It also has the talent in terms of STEM graduates to achieve that. 

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However, a precursor to developing AI is the availability of huge amounts of data that again necessitates the need for data centres.

Different factors provide different advantages for countries to participate in the different stages of the AI value chain. Because data centres require significant amounts of energy to operate, countries with low electricity costs can secure a foothold in the value chain.

Countries like Germany, the UK, Australia and the US and similar countries with which India has or wants to collaborate with, in AI, have an electricity cost rate of 0.38, 0.26, 0.25, and 0.15 US dollars per kWh respectively as of March 2020. As the world average is at 0.14, electricity in India costs as low as 0.08 US dollars per kWh.

This puts India at a great advantage to becoming a Data Centre hub, and a well-defined policy can help improve its position in the AI value chain.

Wrapping Up

As increasing digitisation and legal frameworks necessitate the need for a well-defined policy to ensure sustainable growth in data centre infrastructure, favourable economic and geographic factors provide India with an added benefit to achieve that goal. The government’s initiative should be looked at as an opportunity by domain experts to proactively provide feedback to the draft policy to ensure necessary aspects are covered in it.

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