India data centres to get cheap loans in boost for local billionaires

Mumbai

INDIA'S plans to classify data centres and energy storage as infrastructure assets allowing firms to access cheap and long-term credit, in a big boost for billionaires Gautam Adani, Sunil Mittal and Mukesh Ambani's plans to aggressively grow in these segments.

"Data centres and energy storage systems including dense charging infrastructure and grid-scale battery systems will be included in the harmonised list of infrastructure," Nirmala Sitharaman, India's finance minister, said on Tuesday (Feb 1) as part of the annual budget speech in Parliament. "This will facilitate credit availability for digital infrastructure and clean energy storage."

The policy tweak, effective from Apr 1, comes as Asia's No 3 economy seeks to keep its data within its borders as well as stoke a massive boom in online payments, e-commerce and quantum computing. Roll-out of ultra-speedy 5G telecommunications services will further increase demand for data centre services, spurring conglomerates helmed by Adani and Mittal to rapidly scale up.

Ambani's Reliance Industries, which is developing gigafactories including one for energy storage as part of a US$76 billion investment plan, is also likely to benefit from this reclassification.

The infrastructure tag "is expected to provide access to cheaper and long-term institutional funds, which will promote investments", Radha Dhir, chief executive officer and India head at real estate consultancy JLL, said in an e-mail. She expects India's data centre capacity to double from 499 megawatts (MW) in the first half of 2021 to 1,008 MW next year.

Adani, Asia's second-richest person, said in November that he wants his conglomerate to be a world leader in green data storage, with sites run entirely on clean power, in sync with India's goal of turning carbon net zero by 2070. The Adani Group plans to initially build data centres in Mumbai, Chennai, Hyderabad and in and around New Delhi.

Bharti Airtel, the country's No 2 wireless carrier overseen by Mittal, announced plans in September to invest 50 billion rupees (S$900 million) to triple its data centre capacity to 400 MW by 2025. Reliance's digital unit has also been looking to build a data centre, reported local media.

Representatives for Adani Group, Reliance and Bharti Airtel did not immediately respond to an e-mailed request for comments on the policy change announced in the budget. BLOOMBERG