Securing India’s Digital Future: The Strategic Need for More Data Centres

In this globalised world, information travels faster than borders and hence data has emerged as a significant determinant of national power. Each digital transaction creates phenomenal amounts of data that is processed and stored. Data centres store this data and act as an important infrastructure that supports digital governance.

Illustration by The Geostrata

India produces almost one-fifth of the data in the world, but exercises control over a mere percentage (around 3 per cent) of the world's data centre capacity. This gap between data created and available data centres is becoming stark as India rapidly develops with digital growth through initiatives like Digital India, the implementation of 5G, and greater adoption of AI.

The localisation of data infrastructure must be at the centre of geoeconomic and security priorities. Therefore, the need to increase data centres is critical to ensure the digital future of the country and the preservation of its sovereignty.

Safeguarding sensitive data is key to national security, including access to sensitive government records, defence intelligence, and personal data of citizens. Data sovereignty, by putting the data within a country's physical borders, enables the country's authorities to access that information without foreign interference.

The Reserve Bank of India in 2018 issued a direction specifically requiring payment system data to be stored within India, clearly demonstrating the precedence of sovereignty.

The Digital Personal Data Protection Act (DPDPA), 2023, reiterates the focus on secure control and storage of data, protection of privacy and security, and enables local law enforcement to act expediently during threats. When information is stored in foreign cloud centres, it has the ability to leak the information to foreign surveillance and foreign jurisdiction, with potential risks to national security.

For instance, time delays caused by international borders and jurisdiction in responding to investigations of cyber crimes or terrorism may lead to lost evidence and criminal threats to national interests. If India continues to invest in and build additional data centres, it will better control its digital assets and ensure that critical data is only accessible to agencies authorised by law to collect the information.

India ranks as the second-largest mobile internet user globally, which makes it necessary to expand into data centres in India. Beginning in 2024, India had 751.5 million internet users, which represents a 52.4 per cent access rate.

The need for effective data processing and storage attracts attention with the growing reliance on mobile internet. 

India daily records incidents of cybercrime and cyberattacks, which have the potential to escalate in future. In order to protect against cyber threats, data centres with security measures help mitigate the risks, especially when cybercriminals can disrupt government/financial operations, as well as public safety. 

Data centres in India should be localised, so that a country-specific approach to cybersecurity can be implemented without relying on providers from other countries who may not conform to the standards India would require. An excellent example is the data facilities of the National Informatics Centre located in Delhi and Hyderabad, which illustrate how data centres enable the safeguarding of sensitive data assets while facilitating e-governance.

Edge data centres that compress data closer to the point of origin can provide real-time threat detection for applications using IoT and 5G networks, especially for national security purposes like border monitoring. Increased data centre capacity enables India to detect, prevent, and respond to cyber incidents while reducing the risk of data breaches.

Data centres are of critical importance to industries such as defence, healthcare, and finance, which are all essential for national security. The BSFI sector, which processes trillions of dollars in transactions, is required to utilise local data centres. Also, the defence system produces data streams that need secure, high-capacity, real-time data storage mediums for intelligence analysis and military operations.

The rapid growth of data-heavy technologies like 5G and AI will increase consumption patterns, thus necessitating infrastructure that can scale, like hyperscale data centres.

Yotta's D1 in Greater Noida, Uttar Pradesh, marks a significant milestone in India’s data centre capacity. Increasing the importance of data centres and expanding them in diverse regions in India will reduce over-reliance on urban centres and increase resilience in this age of cyber warfare.

Smaller cities like Vizag, Pune and Ahmedabad are also emerging as important data hubs, which shows more growth opportunities for a number of centres to develop.

A strong data centre ecosystem will promote economic sustainability, a critical component of national security. As of 2022, India's data centre industry has a present value of $5.6 billion USD, with strong prospects for growth, and large multinational corporations entering the data centre sector (e.g., Microsoft, Amazon).

This push will lead to additional job creation, innovation, and the opportunity for India to participate in the digital economy on a global scale. The presence of domestic data centres will lower the presence of foreign companies that will be required to meet local data localisation requirements. This will exemplify the presence of domestic data centres and will place domestic businesses at a relative advantage compared to subsidiaries of global companies.

Data Centre Economic Zones and localised initiatives like Tamil Nadu's green data centre initiative are enabling benefits to be experienced in smaller urban settlements. Initiatives like these will help decrease regional imbalances in the economy and will further improve the overall interconnectivity that will enhance the mobility of economic and data transactions.

More importantly, a well-developed digital economy based on localised infrastructure will support India's efforts to ride out potential economic shocks and provide a degree of certainty analogous to avoiding disputes or potential cyber-attacks.

It must be pointed out that India cannot continue outsourcing its sensitive information to foreign servers any longer. Creating more homegrown data centres has gone from being an option to a matter of national security. In fact, there are huge obstacles, such as high energy demands, exorbitant land acquisition costs, and a lack of trained human resources. Furthermore, the majority of Indian organisations are still reliant on foreign cloud service providers like Amazon Web Services, hence exposing themselves to serious risks.

With a target capacity of 2,070 MW by 2025 and with supportive policies like the DPDA, these are a step in the right direction, but are still in the process of evolving. India currently needs proactive action: improved infrastructure, improved policies, and a big push towards building more data centres. The more the expansion of data centres in India, the better we can protect our data, economy, and future.

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BY ARUSHI JAIN

CENTRE FOR STRATEGIC STUDIES

TEAM GEOSTRATA

info@thegeostrata.com