India emerging as global hub for data centres

India has already overtaken Japan, Australia, Singapore, Hong Kong and South Korea

By HP Ranina/NRI Biz Matters

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Published: Tue 28 May 2024, 5:39 PM

Last updated: Tue 28 May 2024, 5:52 PM

Question: Some of my friends in the East Asian countries have applied for jobs in India with companies which are setting up data centres. Is there any reason for this considering the fact that other countries like Japan and South Korea are also emerging powers in this field?

ANSWER: Between 2018 and 2023, India’s data centre industry secured investments of more than $40 billion from global and domestic investors. Many of these investors are private equity firms. Currently, India has an installed capacity of 950 MW and anticipated addition of another 850 MW by 2026. As a result, India has become the data centre leader in the Asia Pacific region having overtaken Japan, Australia, Singapore, Hong Kong and South Korea.

The reason for India emerging as a leader is on account of favourable market conditions which are found to be attractive by multinational corporations seeking to expand their digital services and relocate from other markets. Sustained demand is expected from technology companies and cloud service providers which seek to explore alternative solutions, such as hyper scale facilities. The top states in India which are attracting investment in the data centre industry are Maharashtra, Tamil Nadu and Uttar Pradesh.

Question: According to recent data, China’s exports are showing a rising trend. Will India be able to grab a higher share of global trade given the difficult times which are currently faced due to geopolitical uncertainties?

H. P. Ranina is a practising lawyer, specialising in tax and exchange management laws of India.

ANSWER: Export of Indian goods and services is expected to increase by about 15 per cent touching $900 billion in 2024-25 as against $780 billion in the last financial year 2023-24. Export of goods and merchandise is expected to be $500 billion while services exports are expected to go up to $400 billion.

The main thrust in exports comes from non-traditional items which India has been exporting. Sales of electronic items and automobiles in the global market have given the right impetus apart from pharmaceutical products which have registered a sustained increase in sales. Revenue from export of global services has more than doubled as a result of the setting up of global capability centres. GCCs are specialised offshore entities set up by multinational companies in India to support their business processes including IT-related services, data analytics, among others. In one year alone, the number of GCCs in India has doubled from 700 to 1,580 and resulted in employment of 1.3 million highly skilled engineers. Goldman Sachs has, in a recent report titled ‘India’s rise as the Emerging Services Factory of the World’, stated that the services exports will increase dramatically, not only in IT-enabled services but also in professional consulting services. The establishment of GCCs has also resulted in a growing demand for commercial and residential real estate which has given a boost to the economy.

Question: I believe that a new advanced version of ChatGPT is about to be launched in India. I have been told that this will be a game changer and help millions of people. Is there any information on this?

ANSWER: OpenAI’s latest model will be available in the near future which will benefit a large number of people. This version is called GPT-4o. The ‘o’ stands for omni because this model can handle text, vision and audio all at once in the same system. It has potential for real time voice translation and therefore will help people speaking different languages in different states of India to communicate.

In short, it will bridge the communication gap seamlessly amongst persons of different states and countries, capturing emotions and nuances for a more human like experience. This will revolutionise communication on a global scale. GPT-4o’s characteristics come from a combination of factors. While more data and processing power will play a decisive role, the key advantage lies in the manner in which this data is handled. This unified approach will allow GPT-4o to tackle complex tasks with greater accuracy and efficiency. The innovation will enable models to better understand complex data. It is expected that the integration of GPT-4o into cloud based contact centre solutions will result in significant gains through automation.

HP Ranina is a practising lawyer, specialising in corporate and tax laws of India.