The Finance Minister of India, during the annual budget of 2022, announced infrastructure status to data centres. This is expected to promote investments to make India a data centre hub amidst the ever-growing global data traffic. The budget announcements also included cheaper borrowing, 5G auctions and internet access to all villages.
Many experts are now hopeful that the policy initiatives announced in the 2022 budget would accelerate the data centre industry growth and spur more investments in India.
The infrastructure status of data centres
Infrastructure includes all the elementary services necessary for the functioning of the economy. By classifying data centres in the infrastructure sector, the Government can cater to the increasing internet demands of the population. The operators can now take credits of a longer tenure at cheaper rates. They can acquire foreign funding from the external commercial borrowing route and borrow money from the India Infrastructure Financing Company.
As the data centre industry is capital intensive and investments have long gestation periods, the move of the Government will enable the domestic businesses to expand faster, and this will make them more competitive.
The Government is formulating incentive schemes that will encourage companies to set up data centres in India. Reports say that the Government is planning to provide 3-4% capital investment as incentives and real estate support and speedy clearances.
The state governments are also supporting this move.
5G auctions in 2022
The 2022 budget mentioned details of the 5G spectrum auction. The government is planning the auction soon so that the operators can roll out the technology soon. While most data centres in India are located in city outskirts, the coming of 5G will see small data centres within the cities, near call towers to reduce latency and increase speed.
Internet in villages
The Government aims to provide internet to all the villages in India. By 2025, under the BharatNet project through Public-Private Partnerships, optical fibres will be laid connecting the villages.
This will in turn lead to the setting up of edge data centres that are located closer to the population.
As India moves ahead in the path of digitization, the Government’s initiatives to support the country by rolling out 5G, providing internet connection to all the villages and above all reclassifying data centres as a part of the infrastructure sector is a commendable move.
Also read: Choosing the right server for your needs: Data Center vs. Cloud
