Recommendations for Data Centre Policy

Executive Summary

Globally, data is being created at an unprecedented pace. Global Datasphere, which is the
total amount of data created, stored and replicated is estimated to grow from 33 ZB in 2018,
to 175 ZB by 2025.1 Given this trend, there is a need for Data Centres to store data, which in
turn can be leveraged to provide a variety of cloud services.
In this background, the Finance Minister in her Budget speech this year proposed bringing
out a policy to enable the private sector to build Data Centre parks in India. In response to
this announcement, NASSCOM formed a 10 member Data Centre Policy Taskforce,
comprising of senior industry leaders, to propose recommendations that can help promote
the growth of Data Centres in India. The key ones are listed below.
1. Establish Pre-Provisioned Data Centre Parks with necessary infrastructure to host
multiple Data Centres.
2. Establish dual power grid networks to ensure uninterrupted supply of electricity.

3. Allow Data Centres to consume Renewable Energy procured directly from power
producers through the open access system, without any restrictions.

4. Allow IP-I companies to share passive infrastructure directly with Data Centres in
order to establish, maintain and operate an extended “private telegraph” (non-public
telecommunications services) between two or more Data Centres in different
locations.

5. Enable Data Centres entities to import dual use network equipment for internal use
and network infrastructure.

6. Implement a Dial Before You Dig Policy (DBYDP), which would allow authorities
responsible for carrying out construction work to access information about the
underlying network infrastructure before digging.

7. Create Common Service Ducts and utility corridors in all new cities as well as State /
National highway road projects.

8. Recognize Data Centres as a separate category in the National Building Code.

9. Introduce deemed approval system for statutory clearances.

10. Provide ‘Infrastructure’ status to Data Centres.

11. Notify Data Centres as Essential Services under “The Essential Services Maintenance
Act, 1968”

12. Create an implementation mechanism to implement the above recommendations.

1Reinsel et al., ‘The Digitization of the World: From Edge to Core’, IDC White Paper, November 2018; available at:
https://www.seagate.com/files/www-content/our-story/trends/files/idc-seagate-dataage-whitepaper.pdf

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Background

The Finance Minister (FM) in her Budget speech this year proposed bringing out a policy to
enable the private sector to build Data Centre parks in India. The FM also mentioned that this
will enable firms to “skillfully incorporate data in every step of their value chains”.2

This announcement to build Data Centre parks in the country is significant and timely, given
that the amount of data being generated globally has leapfrogged by several hundred times
over the last decade. Today, companies rely on large volumes of data to add value to their
supply chain and enhance customer experience by greater levels of personalisation. The
consequence of this increasing reliance on data, is an infinite expansion in the size of the
Global Datasphere.3 Estimated to
be 33 ZB in 2018, International
Data Corporation (IDC) forecasts
the Global Datasphere, to grow to
175 ZB by 2025.4 With more data
being generated, the need to
process data to support high-end
applications has also increased.
This has spurred the growth of
Data Centres worldwide.
Traditional Data Centres were built on dedicated infrastructures for each workload including
network switches, blade systems, and dedicated computing. However, such Data Centres were
unable to support the increasing complexities which have arisen due to big data, cloud
computing and social media.5 This has resulted in the need for developing hyperscale Data
Centres that can ensure better performance and handle large-scale data requirements.
According to forecast made by Structure Research, the
global colocation Data Centre market which stood at Region Growth rate
$39.4 bn in 2018 is expected to grow to 69.79 bn.6 The (2018-24)
Latin America 18.2%
Asia-Pacific (APAC) market is projected to become the
world’s largest colocation Data Centre market by 2021 at APAC 12.2%
$19.8 bn; in doing so, it will overtake North America EMEA 11.1%
which is projected at $19.5 bn. This trend is expected to North America 6.4%
continue till 2024.7 Europe, the Middle East and Africa
(EMEA) is projected to reach $17.2 bn by 2024 and it is forecasted that Latin America will
reach $1 bn for the first time in 2024.8 This amounts to a global CAGR average of 9.9% for the

2 The full text of the Union Budget 2020-21 is available at: https://www.indiabudget.gov.in/doc/Budget_Speech.pdf
3 Lexico defines ‘datasphere’ as “The notional environment in which digital data is stored; especially the internet viewed in
this way”; available at: https://www.lexico.com/definition/datasphere
4 Reinsel et al., ‘The Digitization of the World: From Edge to Core’, IDC White Paper, November 2018; available at:

https://www.seagate.com/files/www-content/our-story/trends/files/idc-seagate-dataage-whitepaper.pdf
5 Markets & Markets, ‘Hyperscale Data Centre Market by Solution (Server, Storage, Networking, Software), Service (Consulting,

Installation and Deployment, Maintenance and Support), End-User, Data Centre Size, Industry, and Region - Global Forecast
to 2022’, May 2017; available at:
https://www.marketsandmarkets.com/Market-Reports/hyperscale-data-Centre-market-26026183.html
6 João Marques Lima, 'Time Travel To The Future: How The Data Centre Market Will Grow By 2024’, Data Economy, 21

August 2019; available at: https://data-economy.com/time-travel-to-the-future-how-the-data-Centre-market-will-grow-by-

2024/ (last accessed 12 March 2020).
7 Id
8 Id

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time period 2018-2024.9 The table above provides region-wise growth rates of the data-Centre
market:10
In February 2020, India had close to 150 co-location Data Centres. City-wise figures on Data
Centres in major cities in India are provided in the table.11 The India Data Centre market size
is forecasted to reach USD 1.5 billion by 2022 from USD 1.0 billion in 2018, at a Compound
Annual Growth Rate (CAGR) of 11.4%.12 It is projected that 431 MW (IT design power load)
capacity will likely be added between 2020 and 2024; the existing capacity is 350 MW.13 The
growth in co-location Data Centres in India is attributed Location No. of data
inter alia to global hyperscalers, companies increasingly Centres
locating their Data Centres within colocation Data Centres, Delhi – NCR 26
and adoption of cloud services. 14
Bengaluru 25
In India, the Data Centre market has seen a healthy growth Chennai 12
in the last few years due to the explosion of data creation, Pune 9
and data consumption through smartphones, social media Mumbai 27
and e-commerce. In India, colocation setups are being
deployed with cloud computing architecture, putting the Ahmedabad 6
country on a path to becoming one of the biggest hubs for Kolkata 7
colocation Data Centres globally.15 Other cities 38
Despite the positive outlook for India as a Data Centre market in coming times, some
challenges related to land, power and connectivity remain, which must be addressed to make
India a Data Centre hub.16
Scope
This document identifies challenges faced by Data Centres, both at the stages of
establishment and operation, and suggests policy solutions to address them.

Recommendations
Data Centres require significant amount of land, power and network connectivity and
therefore, are capital intensive. Provisioning these resources at a competitive price in a speedy
manner is a prerequisite to attract companies to set up Data Centres in India. This combined
with easing of certain regulatory and operational measures should create the desired policy
framework.
Based on industry consultation, we have identified certain key challenges and have provided
suitable recommendations below.

9 Id
10 Id
11
Data as per https://www.dataCentremap.com/india/
12 Markets & Markets, ‘India Data Centre Market by Component (Electrical, Mechanical, Communication, Security), Model

(Captive, Outsourced), Vertical (BFSI, Telecom and ITES, Defense), Trends, Vendor Ecosystem Analysis, and Porters Five
Forces Analysis - Forecast to 2022’, April 2019; available at:
https://www.marketsandmarkets.com/Market-Reports/india-data-Centre-market-173006400.html
13 Virendra Soni, ‘India’s data Centre industry to see threefold revenue growth in five years; to reach $3.2 bn by FY 2023-24’,

Daily Host News, 13 December 2019; available at: https://www.dailyhostnews.com/indias-data-Centre-industry-to-see-

threefold-growth
14 Alan Richardson, ‘Good times await Indian Data Centre Industry in 2020’, DataQuest, 2 January 2020; available at:

https://www.dqindia.com/good-times-await-indian-data-Centre-industry-2020/
15 Colocation data Centres are shared facilities where different companies use the infrastructure.
16 Shailesh Kumar, ‘India Data Centre Market Must Focus on Implementing Best Practices’, Inc42, 16 November 2019; available

at: https://inc42.com/resources/indian-data-Centre-market-must-focus-on-implementing-best-practices/

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Recommendation 1: Establish Pre-Provisioned Data Centre Parks with necessary
infrastructure to host multiple Data Centres.

To be actioned by: State Governments.

Rationale: Data Centres have unique infrastructural requirements, particularly on account of

power, land and connectivity. The power demand (critical IT load) of a Data Centre, today,
ranges from 15 - 100 MW. To provide a comparison, the average power demand of a district in
India is around 500 MW. This huge requirement of power makes it challenging to build a Data
Centre in a mixed-use zone or even in an industrial estate, as the power distribution network
is generally not designed to meet such huge demand in such area. Further, a Data Centre would
require anywhere between 3-12 acres of land and high bandwidth connectivity for its
operations.

Considering that these factors require government intervention, it can be efficiently

channelized by setting up dedicated Data Centre Parks. These Data Centre Parks will be
demarcated enclaves, pre provisioned with the necessary infrastructure, designed to host
multiple Data Centres. These parks with its ready infrastructure provisioning should operate
on a plug and play model, which can significantly reduce the time required for establishing a
Data Centre.

To provide an illustration of the provisioning requirements, let’s consider a land parcel of 50

acres. Approximately, 40% of the land (20 acres) would be consumed for common
infrastructure (roads/ power substation / water storage). The remaining land of 30 acres will
be available for construction. Going by the thumb rule, about 3 to 15 acres of land is required
to construct a Data Centre which has a critical IT load of 15 -80 MW. Using this thumb rule,
the total critical IT load of the park would be in the range 150 - 160 MW. Considering a PUE
(Power Usage Effectiveness) Factor of 1.7, the total raw power requirement of the park would
be in the range of 255-272 MW.

For connectivity, at least three different fiber paths with a network capacity of 2-5tbps
(terabytes per second) should be available. Multiple fiber paths are required to hedge the risk
that arise out of a fiber cut.

These parks should preferably be established by the State Governments through a government
agency. The risk of land hoarding by private players and potential re-purposing of real estate
for end usage other than support for Data Centre infrastructure needs to be taken into account,
if the state governments encourage private players to build and own the parks.

Further, these parks should be located in land parcels that are conducive for the establishment
of large scale Data Centres. The factors required to be considered for choosing the site for a
Data Centre are listed below.

1. Land elevation: A Data Centre located in a low-lying area is prone to risk of flooding.
So, land elevation based on 100-year flood plane data should be considered to assess the
suitability of the land parcel for hosting a Data Centre.

2. Air quality: The air inside Data Centres should meet certain standards in terms of its
sulphur content and concentration of Particulate Matter. Sulphur being a corrosive

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 material could lead to corrosion of the equipment. Sulphur being a conductive material,
could lead to short-circuit, damaging equipment.

3. Seismic zone: To minimise risk from earthquake,

Data Centres should ideally be located in in areas
which fall under seismic zone 4 or below. If the Data
Centres are located in zones with a higher rating, the
buildings would require installation of snubbers (and
other materials) to arrest shocks, which will lead to
increase in capital cost.

4. Significant separation from High Tension Electricity

lines, is required to minimise the impact of Electro
Magnetic Fields generated by the lines. For certain
equipment used in Data Centres, the permissible limit
is close to 3.7 Microtesla [µT] / 37 Milligauss [mG].
Breach of this limit can impact functioning of these equipment.

5. Significant separation and distance from military establishments should be considered to

avoid the disruption in connectivity due to jammers installed in military establishments.

6. Data Centres should ideally not be built under a flight path, to minimise risk that
emanate from air crash. So, existing flight paths and future paths needs to be taken into
consideration.

Recommendation 2: Establish dual power grid networks to ensure uninterrupted supply of

electricity to Data Centers

To be actioned by: State Governments / Discoms.

Rationale: Data Centres operate round the clock and their customer contracts, require them
to be functional upto 99.995% of time. To meet this target, Data Centres require uninterrupted
supply of power. Disruption in power supply is one of the key challenges faced by the Data
Centres in India today. To address this issue, power connections should be provided from two
different substations. This can ensure that at least one is functional when the other faces a
breakdown.

Power cost account for about 30%- 50% of the operational cost of a Data Centre. Though India
is the cheapest power producer in APAC Region, the average tariff paid by the customers is
higher than countries like China, Vietnam and Malaysia.17 Considering that there is no
sustainable way of providing power at a cheaper price, it is important for the Government to
ensure uninterrupted supply of quality power. Therefore, dual power grid networks should be
established to supply power to Data Centres. While doing so, determination of fixed cost
should be determined based on maximum demand of the consumer without considering the
second power connection provided, as only one source will be used at a time.

17
Deboy Sengupta, ‘India is APAC’s cheapest power producer’ , Economic Times, 19 August 2029; Available at :
https://economictimes.indiatimes.com/industry/energy/power/india-is-apacs-cheapest-power-
producer/articleshow/70735458.cms

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Recommendation 3: Allow Data Centres to consume Renewable Energy procured directly
from power producers through the open access system, without any restrictions.

To be actioned by: State Governments / Discoms.

Rationale: In an effort to be environment friendly, some companies have made commitments

to use renewable energy (RE) to meet a part of their power requirement, which in some cases,
is as high as 80%. Though there is an open access system which allows large consumers to buy
power directly from generation companies, distribution companies in many states have put in
various restrictions with regards to the contracted capacities of the RE, or banking of RE for
use during peak periods, which restrict the ability of CSPs to draw 100 %RE to run their Data
Centres. While these restrictions are put in place to maintain grid balance, considering that
the power requirement of Data Centres currently form a small proportion of the total
consumption, exceptions should be made for Data Centres based on certain criteria, to allow
them to consume 100% of the RE procured directly from power producers through the open
access system.

Recommendation 4: Allow IP-I companies to share passive infrastructure such as Dark

Fibers directly with Data Centres entities in order to establish, maintain and operate an
extended “private telegraph” (non-public telecommunications services) between two or more
Data Centres in different locations.

To be actioned by: Department of Telecom – Central Government.

Rationale: Cloud service providers (“CSPs”) require access to communications infrastructure

(including access to passive infrastructure such as dark fibre) to connect two or more Data
Centres in different locations. Currently, it is not permissible under Indian law for unlicensed
entities such as CSPs to access dark fibre to construct their own private networks and connect
their Data Centres (not for the purposes of providing public telecommunications
services). CSPs, therefore, are forced to procure all active network services/connectivity from
telecommunications services providers (“TSPs”). This restriction hinders the growth of Data
Centres in India for the following reasons:

 Services provided by TSPs are significantly more expensive than passive infrastructure
such as dark fibre offered by Infrastructure Provider Category-I (“IP-I”) companies;
which substantially increases Data Centres and CSPs costs.
 TSP services cannot ensure very high availability, bandwidth and low latency for
extremely high amounts of data (especially given India’s vast geography) and relatively
limited existing technology infrastructure and broadband deployment.

Recommendation 5: Enable Data Centre entities to import dual use network equipment
for internal use and network infrastructure

To be actioned by: Department of Telecom – Central Government.

Rationale: Currently, Data Centres in India are prohibited from importing certain dual use
equipment, even if they do not intent to use such equipment for telecoms services. For
example, the import of Dense Wavelength Division Multiplexing (DWDM) equipment and
optical switches is restricted, even if the equipment will only be used in a closed-user group,

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private corporate network, which does not interconnect with a public network. These
restrictions lead to operational challenges and affect the quality and efficiency of Data Centres
and cloud services in India.

Recommendation 6: Adopt A Dial Before You Dig Policy (DBYDP), which would allow
authorities responsible for carrying out construction work to access information about the
underlying network infrastructure before digging.

To be actioned by: NHAI/ State Government

Rationale: The business model of Data Centres and Cloud Service Provider is to build upon a
very reliable network, accessible anywhere at any time with 99.999% probability of
availability. However, frequent digging of roads due to construction work and lack of
coordination between multiple agencies, poses a continuous threat of cable breaks or ‘'hits’' to
Data Centre operators.

Recommendation 7: Create Common Service Ducts and utility corridors in all new cities
as well as State / National highway road projects.

To be actioned by: NHAI/ State Government

Rationale: It is essential that network cables that offers such connectivity are well secure and
protected. Providing Common Service Ducts and utility corridors in all new cities and highway
road projects, along with efficient and cost-effective mechanisms for infrastructure companies
including Data Centres companies to gain access to them will bring down maintenance and
repair costs for the companies.

Recommendation 8: Recognize Data Centres as a separate category in the National

Building Code.

To be actioned by: Bureau of Indian Standards

Rationale: Currently, the building codes in India do not recognize “Data Centre” as a separate
category. So, the building norms of office buildings are applied to Data Centres. Given that
Data Centre buildings are primarily designed to host equipment, with limited human entry or
movement, these norms are not suitable. For example, the floor load handling requirement of
a typical office space would be around 500 kg/sq.ft, whereas for Data Centres it would be
between 1250 -1500 kg/sq.ft. The requirements on account of toilet, parking, etc are much
lesser for a Data Centre compared to any office space or commercial building. Some of these
constraints reduce the spatial efficiency of Data Centres and unnecessarily increase the cost of
running Data Centres.

Therefore, given the unique structural requirements, Data Centres, should be recognized as a
separate category in the National Building Code with suitable design considerations.

Recommendation 9: Introduce a single window enabled deemed approval system for

statutory clearances, at both Central and State level.

To be actioned by: DPIIT / State Governments

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Rationale: About 30 different approvals (listed in Annexure 1), are required from central and
state governments, before a Data Centre can start operations. While a single window system
for statutory clearances exists in many states (21 states as on Dec 2019), no such system exists
at the level of Union Government. Further, to prevent delay in these clearances, a deemed
approval system with specified timelines, should be introduced both at the Central and State
govt. level. Under this deemed approval system, an application would deemed to have been
approved, if the government fails to act on the application within the specified timeframe.

Recommendation 10: Provide ‘Infrastructure’ status to Data Centres.

To be actioned by: Department of Economic Affairs, MoF.

Rationale: Infrastructure status to Data Centres will enable the industry to raise money from
insurance companies, pension funds, and international lenders with a longer tenure and on
easier terms. This would help bring down the cost of capital. This will also give Data Centres
access to cheaper foreign currency funding through the external commercial borrowing route.
Given the massive need for capital to establish Data Centres, infrastructure status would help
attract investment in the sector.

Recommendation 11: Notify Data Centres as Essential Services under “The Essential
Services Maintenance Act, 1968”

To be actioned by: Ministry of Home Affairs

Rationale: Contractual agreements with their customers require Data Centres to be functional
more than 99.99% of time. Also, DC’s functioning is critical to the operations of institutions
they serve. Therefore, declaring Data Centres as Essential Services will prohibit strike by their
employees and address the operational risk that arise out of strikes. Further, in times of
calamity and other crisis, the status of Essential Services could provide the basis for State
Governments to consider providing necessary support on a preferential basis.

Recommendation 12: Create an implementation mechanism to implement the above

recommendations.

To be actioned by: Central Government

Rationale: While some of the above recommendation are to be implemented by the State
Governments, others falls under the ambit of Central Government. Given that all
recommendations are important to promote Data Centres, there is a need for creating a joint
Centre-State implementation mechanism to ensure these recommendations are implemented.

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Annexure 1: Illustrative List of approval / clearances required before
commencement of operation

The approvals required to establish a Data Centre facility may have some variations in
different states. As an illustration, the clearances required to build a Data Centre in Chennai
is provided in the below table.

Under
S.
Clearance Authority single
No
window
Statutory Approvals - Pre-Construction Stage

1 Environment Clearance Ministry of Environment & Forest (MOEF) No

Metropolitan Development Authority &

2 Consent to Establishment Yes
Central Pollution Control Board (CPCB)

Provisional Fire No Objection State Fire and Rescue Services / National

3 Yes
Certificate (NOC) Fire Protection Association (NFPA)

4 Storm Water Permits State Pollution Control Board Yes

5 Sewage Discharge Approval State Pollution Control Board Yes

Central Pollution Control Board (CPCB) -

6 Tree Cutting NOC No
Forest Department

7 Drainage/ Garden NOC Metro Water Supply and Sewage Board Yes

8 Building Permit / Approvals Metropolitan Development Authority Yes

9 Commencement Certificate Metropolitan Development Authority Yes

Service provider / Controller of

10 Telecom No
Communication Accounts of State

11 Water Supply Metro Water Supply and Sewage Board Yes

Power Connection Feasibility,

12 State Electricity Board Yes
Design & Sanction

13 Traffic Approval NOC Commissioner of Traffic No

14 NOC for High Rise Structure Airport Authority of India (AAI) No

Pre-Construction Stage Compliance
15 Registration with DIC Director of Industry (DIC) No

16 Registration IEM Ministry of Commerce

No

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 Statutory Approvals - During Construction Stage
220 kV Power connection
17 cable laying from Substation State Electricity Board Yes
to project premises
220 kV Power Connection
18 Substation Testing and State Electricity Board Yes
Charging

19 Form V Approval - Labour Labour Department - State Government Yes

20 Plinth Checking Certificate Metropolitan Development Authority Yes

Central Electricity Authority (CEA) / Chief

Electrical Inspector to Government (CEIG)
21 Electricity Safety License No
/ Public Works Department (PWD)
Electrical Inspector

Central Electricity Authority (CEA) /

Elevator Permits &
22 Public Works Department (PWD) No
Certification - Safety License
Electrical Inspector
Diesel Generator System CEIG/ State PCB / PWD-Electrical
23 No
approval Inspector

Petroleum and Explosives Safety

Organisation (PESO) / Chief Controller of
24 High Speed Diesel License No
Explosives Department (CCOE) / PWD -
Electrical Inspector

Statutory Approvals - Post-Construction Stage

Public Welfare Department - State
25 Lift Operating Licenses Yes
Government - Lift Inspector
Metropolitan Development Authority -
26 Occupancy Certificate Yes
Fire Department

27 Completion Certificate Metropolitan Development Authority Yes

Consent to Operate
28 Central Pollution Control Board (CPCB) No
Certification
Statutory Approvals- Fire and Explosive

Petroleum and Explosives Safety

Preliminary Explosive
29 Organisation (PESO) / Chief Controller of No
Licence for HSD
Explosives Department (CCOE)

Petroleum and Explosives Safety

Final Explosive Licence for
30 Organisation (PESO) / Chief Controller of No
HSD
Explosives Department (CCOE)

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