Budget 2020: FDI to increase, Indian IT firms to benefit from FM’s Data Centre plan

Finance Minister Nirmala Sitharaman’s proposal in the Union Budget to come up with a policy for setting up data centre parks would benefit tech services companies and attract foreign investments in creating adequate infrastructure for all industry sectors, said analysts.

“Long term, the move could potentially benefit all IT firms including TCS, Infosys, Wipro, HCL Technologies, Tech Mahindra, along with mid-sized firms like LTI, Mindtree, Persistent, and Hexaware, among others, given the incremental focus on growing their digital businesses,” said Harit Shah, senior analyst, Information Technology, IndiaNivesh.

The government said the data centres parks would be built keeping in mind the use of analytics and internet of things across industries. “We will soon roll out (a) policy to enable (the) private sector to build data centres throughout the country,” said Sitharaman in her Budget speech.

Several large firms such as Adani Group, Hiranandani Group and Reliance Industries have already announced investment plans to set up data centres in various parts of the country.

Analysts said dedicated zone for such a park has already been announced and work has started to build such facilities as the government is pushing to create infrastructure. “Essentially, with the push for digitisation across all sectors you need adequate infrastructure at the back-end with data warehouses. Investment zones have been allocated in Mumbai. It will be much in line with the Special Economic Zones,” said Sanchit Vir Gogia, chief executive Greyhound Research.

Industry observers are of the view that a push towards building data centre parks would enable information sharing across cross-functional sectors or organisations. This proposal, according to Rajeshree Sabnavis, founder of Rajeshree Sabnavis & Associates, would also attract foreign investment.

“This will not only enable data accessibility and information sharing across cross-functional databases but also help in improved digital connectivity across the nation. This initiative will also lead to attracting FDI in the country and spur employment generation on a mass scale,” she said.

Shah of IndiaNivesh, however, believes such massive infrastructure development needs strong focus on skill development. “The important aspect needs to be the focus on skills development in these technologies, given that IT firms face a shortage of digital talent.”