In the budget 2022, the Finance Minister Ms Nirmala Sitharaman has accorded Infrastructure status to data centres. “Data centers and energy storage systems including dense charging infrastructure and grid-scale battery systems will be included in the harmonized list of infrastructure. This will facilitate credit availability for digital infrastructure and clean energy storage,”- the FM elaborated in the budget speech.
Data centres are now becoming extremely important in the context of the rise of a data driven digital economy. Data are important for businesses.
Usually, data generated are for three utilities:
- Transactional and
Over the last few years, there is tremendous demand for data from the industrial and business sectors. Besides, the foreign companies are asked to keep data sourced from India within India itself. For this, a data protection bill is on the design stage.
With millions of consumers and goods and services interfacing in the economy, data and the trends are very essential for businesses. Similarly, data is becoming a strategic input.
Humans and machines are added to the digital ecosystem each day, and it is estimated that more than 2.5 trillion bytes of data is created each day. For storing, computing and sharing the data as well as to monetise them, data centres are to be established in an enterprise mode. For the creation of such enterprises, incentives have to be given. It is in this context that the budget has taken a facilitatory step of assigning infrastructure status to data centres. Several new data enterprises are emerging in India in each month. Some of them are started by foreign companies.
What are the advantages of getting infrastructure status?
Now, with infrastructure status, the data centres can get several benefits. Several concessions and liberalised treatments are extended to infrastructure sectors in the form of better access to foreign capital, domestic credit, extension services etc.
- Better access to foreign capital and funding: The status will provide the data centre and energy sector access to foreign funding through the external commercial borrowing route.
- Equity investment can be injected with ease with the infrastructure status. Regulations are more simple and straight for attracting equity investment for companies in the infrastructure sector.
- Refinancing of the existing loans can be done with low rate of interest. This means that existing high cost loans can be replaced with low interest rate loans.
- Overall enhanced credit availability from domestic financial institutions.
Getting long term loans at concessional rates will help data centres to integrate into bigger platform and better services.