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This article has been written by Kashish Khattar who is an advocate in Delhi. The article is a summary of the data center policy and how the Government envisions to make India a serious contender in the global data center space.

Data is the new oil 

The size of the digital economy is expected to grow from USD 200 Bn to USD 1 Tn by 2025. India has witnessed exponential growth in digital e-commerce, digital entertainment, and exponential use of social media. This is possible due to more than a billion mobile connections and 700 million internet subscribers in the country. 

India’s mobile data consumption is already the highest in the world and is only going upwards. India attracted USD 396 Mn investment in the data centres in 2020 alone!

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According to the Anarock Mace report, India’s Data Centre space is set to get bigger as Indians consume more data and various policy initiatives from the Government. 

The most interesting fact is that Indians are predicted to consume 25GB/month by 2025. Further, talking about Data Centres make sense as they will become the most preferred form of alternative real estate with shifting focus to large hyperscale developments. 


Data Centre is a dedicated secure space within a building, centralized location where computing and networking equipment is concentrated for the purpose of collecting, storing, processing, distributing, or allowing access to large amounts of data. 

Data Centre Parks are specialized Data Zones which are strategically located with the most conducive non-IT and IT infrastructure, and regulatory environment for housing mix of small scale, large scale, clusters of Data Centres to serve the high needs of computing, storage, networking and provision of a wide range of data-related services. 

Data Centre Park Developer is an entity that would be responsible to build the facility of the DC park covering the land, park area, provisions of DC essentials setup such as electricity, networks and other types of equipment. 

Data Centre Operator is an entity who would be responsible to manage and operate end to end Data Centre Operations. 

Cloud Service Providers is a third party firm offering a cloud-based platform, infrastructure, application or storage service. These entities would be hosting their IT infrastructure in the Data Centre or Data Centre Parks to provide the Cloud Computing services to end-users. 

Data Centre operator is an entity who would be responsible to manage and operate end to end Data Centre operations. 

Cloud Service Providers is a third party firm offering a cloud-based platform, infrastructure, application or storage service. These entities would be hosting their IT infrastructure in the Data Centre/Data Centre Parks to provide the Cloud Computing services to the end-users.

Data Centre Economic Zone (“DCEZ”) would be concentrated and specialised Data Zones, with the most conducive non-IT and IT infrastructure, connectivity, power and regulatory environment. 

Data Centre Facilitation Unit (“DCFU”) would be an entity set up by MeitY to monitor existing portal to provide harmonized services to interested Data Centre Park/Data Centre developers on matters related to setting up of Data Centres. 

Data Centre Industrial Council (“DCIC”) would be an entity which shall act as an interface between the sector and the Government. This council shall work to represent the sector’s viewpoint and engage with MeitY regarding various matters concerning the growth of the Data Centre sector in the country. 

Data Centre Incentivization Scheme (“DCIS”) is a projected scheme outlay that will be published by MeitY to provide the scheme details to provide the fiscal and non-fiscal benefits to Data Centre sector and Cloud Service providers. 

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What does the draft policy exactly say?

The vision of the policy is to make India a Global Data Centre Hub. 

This can be done by promoting investment in the sector, propel digital economy growth through various reforms. 

Enable Ease of Doing Business

  1. Providing infrastructure status to the Data Centre Sector: The Government would work towards providing this sector with an “Infrastructure” status. This would bring it in par with the railways and the power sector. This tag would help in availing long term benefits such as credit from international and domestic investors on a longer-term basis and on easier terms. 
  2. Simplified clearances for setting up of Data Centres: Rationalise the clearances that are required to set up Data Centres or Data Centre Parks in the country. A single window clearance setup should be institutionalised by the State or the UT governments. Further, the list of approvals and clearances required for the operationalisation of the data centres along with defined timelines for obtaining the same in collaboration with the authorities should also be there. 
  3. Setting up of Data Centre Parks: States will be encouraged to demarcate specific zones (land parcels) for setting up Data Centre parks with necessary infrastructures like road connectivity, availability of water and other essential infrastructure items. Further, promoting a plug and play model for Data Centre Providers would be more convenient. To offer land parcels, power availability at lower rates, high capacity network back-haul and pre-approved clearances would be a great idea. The respective governments can formulate their own guidelines containing fiscal and non-fiscal incentives to further help expand data centres. 
  4. Formulation of Data Centre Incentivization Scheme for promotion of Data Centre Parks by the Central Government to specify applicable criteria, incentives for the sector. The incentives would also be provided for using domestic IT hardware which would include servers, storage, network devices etc and non-IT equipment such as mechanical, electrical plumbing, cooling equipment etc. 

Enabling a favorable ecosystem for the operations of the Data Centres

For the long term growth of the Data Centre sector in the country, it is crucial to create a compatible, competitive and sustainable operating environment for the businesses. The key elements include: 

  • Availability of clean, uninterrupted and cost-effective electricity for Data Centres remains to be one of the foremost considerations for the Data Centre sector. The key focus area would include: 
  1. Facilitating provisioning of quality power for uninterrupted supply to Data Centres; 
  2. Facilitate Data Centre Parks to set up their own power generation units to ensure the quality of power; 
  3. Identifying mechanism to ascertain long term availability of electricity at reasonable rates;
  4. Enable effective open access systems to allow Data Centre service providers directly procure power from generation companies.
  5. Enable use of renewable energy for Data Centres – solar or wind-based power by collaborating with the Ministry of Power on their various energy initiatives. 
  6. Encourage efficient utilization of energy by promoting innovative techniques and solutions for energy management for reducing the carbon footprint of the Data Centres. 
  7. Further, there will be a formation of a Steering Group which would have representatives from the Ministry of Power, MeitY and State Governments to identify the execution mechanism for the identified intervention related to the availability of the quality of power; 
  1. MeitY will work with the Department of Telecommunications (DoT) to facilitate robust and cost-effective connectivity backhaul. Further, the framework provided by the National Digital Communications Policy 2018 (NDCP) to facilitate common service ducts and utility corridors for enabling the proliferation of Optical and dark fibres for the Data Centre operations and ensuring sharp reduction in downtime due to fibre cuts; 
  2. Facilitating Data Centre providers to establish captive fibre networks especially for connecting Data Centres through appropriate review and re-alignment of existing regulations and policies; Encouraging the Dial Before You Dig Policy to help allow easy access to information about the underlying network infrastructure before the commencement of digging;
  3. Data Centres will be declared as an Essential Service under The Essential Service Maintenance Act, 1968. Continuous functioning of Data Centres is critical for the continued delivery of services and to maintain the normalcy of day to day activities. 
  4. Recognising Data Centres as a separate category under the National Building Code. As an interim measure, MeitY will collaborate with the authorised Central Govt. bodies for drafting broad guidelines to be issued for Data Centre buildings.  

Setting up of Data Centre Economic Zones

The Government of India proposes to set up at least four (4) Data Centre Economic Zones (“DCEZ”) in the country as a central sector scheme. These DCEZs will be concentrated and specialised Data Zones with the most conducive non-IT and IT infrastructure, connectivity, power and regulatory environment. These zones would create an ecosystem of Hyper-scale Data Centres, Cloud Service Providers, IT companies, R&D units and other allied industries. 

Promote indigenous technology development, research and capacity building 

There would be the promotion of indigenous hardware (IT as well as non-IT equipment) and software products used in the Data Centres. Extend fiscal benefits to various players to help develop solutions for Data Centre usage. 

Promotion of R&D in the Data Centre ecosystem will be another step in the right direction. Promoting technological products that promote innovation for the Data Centre ecosystem and facilitate their commercialization for sustainable growth. There should be promotion and adoption of established global standards all across the board. Further, the capacity building by using the expertise of various ministries and leading academic institutes to be able to meet the demands of Data Centres and cloud computing platforms. 

Institutional Mechanism for Policy governance

An Inter-ministerial Empowered Committee (“IMEC”) will be set up under the MeitY with participation from various Central Ministries and State Governments. It will be the key decision-making body to facilitate the implementation of various measures as defined under this Data Centre policy. 

There would also be the institutionalisation of the Data Centre Facilitation Units (“DCFU”) within the MeitY to provide harmonized services to interested Data Centre developers. It will be the nodal agency under the IMEC that will implement the decisions taken between various stakeholders. Further, an independent Data Centre Industry Council (“DCIC”) is also proposed to be set up to act as an interface between the sector and the Government. The Government will also undertake mid-term evaluations of the policy and propose any modifications. 


The Data Centre industry will be booming in the coming times. As the Government intensifies the law and policy regarding the data handling, localisation and comes up with a Data Protection Authority, the requirement of the billion people market is going to increase exponentially. According to a JLL report, the data localisation proposed in our data protection law will be the tipping point for the Data Centre industry. 

It would be interesting to see how the regulation and law around this new sector is made up by the Government. 

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