NEW DELHI: Data centers operating in India have sought policy support and incentives, such as industry status, reduced Goods and Services Tax (GST) and concessions for technology adoption green, in the Union’s budget this year.
“The GST legislation taxes for domestic industrial services, at 18%, will also apply to data centers. However, data centers, operating for overseas customers, should continue to be treated as supplies of The adoption of green technologies by data centers could also benefit from favorable tax treatment,” said MS Mani, Partner at Deloitte India.
BS Rao, Vice President, Marketing, CtrlS Datacenters, said the government should waive GST for data centers under construction and grant certain concessions to functional centers, in addition to tax breaks for the use of green technologies and industry status for the entire sector. Data center companies also want electricity waivers for five to seven years from the start date of a unit, Rao said, adding that a 40-60% cost subsidy would help companies such as CtrlS.
Manoj Paul, managing director of Equinix India, said the government should include in the budget “heavy investments” in power generation and improving power distribution infrastructure for upcoming data centers which will need hundreds of megawatts of electricity to operate efficiently. “The industry has also highlighted the changes needed in power distribution policies to enable the data center industry to use green power more efficiently,” he said, and said. added that a “clear roadmap” for data protection policies is needed.
Data centers are driven by deeper internet penetration, increased digital data traffic, public cloud services and higher expected growth for the Internet of Things (IoT). The data center sector is expected to attract billions of investments over the next few years as India is set to become a hub for Southeast Asia’s digital ecosystem. For example, Singapore-based property company CapitaLand said it would invest $1.5 billion to $2 billion to boost its data center presence in India.
Sunil Gupta, co-founder and managing director of Yotta Infrastructure, said government spending on capital goods, engineering and infrastructure is expected to increase, in line with his vision to turn India into a data hub. Industry experts have also said stimulus packages for the industry should be accelerated. Additionally, many data centers are seeking clarification on India’s data protection regulations. The Data Protection Bill panel tabled its report during the winter session of Parliament in December 2021, but the final bill has yet to be approved.
Gupta said the bill must create a framework for hosting third-party data centers and implement the proposed data center incentive program.
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