The importance of geographical diversification for Indian data centers

India's data center market is forecast to grow by a CAGR of around 12% between 2020−2026, which means the country is undoubtedly witnessing a data center boom. That said, as the country's data center footprint grows, industry veterans have warned that India must learn from the past mistakes of places like Amsterdam and Singapore. Both have placed moratoriums on new data centers due to facilities sucking power from the cities and causing environmental damage. 

Subsequently, bracing for the boom, Microsoft Executive Rahul Dhar recently outlined at an event organized by industry lobby CII that India must prioritize geographical diversification when it comes to planning new facilities. 

Rahul Dhar, country director, data centers at Microsoft, outlined: "Many of the developed cities, many of the developed countries have actually stopped building datacentres in those cities. Cities like Amsterdam, modern cities like Ireland, extremely modern cities like Singapore, have almost stopped the development of new data centers in their cities. They are sucking out the entire power of that city."

He added: "How can we completely decongest a city like Mumbai because it is sucking out the entire power of Mumbai or may be some other city like Chennai or New Delhi?"

Currently, over half of the datacenter capacity of India is concentrated in Mumbai alone, which of course, poses a risk regarding power consumption. As it stands, and without significant investment in geographical diversification of data centers, facilities will double in capacity from 200MW to 410MW in just two years. 

Some data center companies in India have already taken these issues into consideration and have indeed decided to diversify and locate their facilities in places with a more reliable power supply. Sify Technologies, for example, targeted the Vashi railway stations for its first data center.

While more thoughtful planning decisions, like the one made by Sify Technologies, is a step in the right direction, experts argue that the push for geographical diversification needs to be stronger. Maharashtra's industries minister Subhash Desai reportedly supports this move and has said that greater state intervention will be possible once its new policy on IT and IT services comes into effect in the next month.