On 16th December 2021, TRAI released the Regulatory Framework for Promoting Data Economy Through Establishment of Data Centres, Content Delivery Networks, and Interconnected Exchanges in India (“Consultation Paper”) which sought comments from stakeholders on the establishment of Data Centres (“DCs”), Content Delivery Networks (“CDN”), and Internet Exchange Points (“IXPs”) in India and any issues related to the same.

Later, on 18th November 2022, TRAI released the Recommendations on Regulatory Framework for Promoting Data Economy Through Establishment of Data Centres, Content Delivery Networks, and Interconnected Exchanges in India (“Recommendations”) which seeks to create reliable frameworks and policies that would boost the development of 5G, Inter of Things (“IoT”), edge computing, data analytics, digital platforms, and applications. It identifies DCs (in the digital ecosystem, DCs are used for content hosting, edge computing, and cloud-based delivery), CDNs (the infrastructure utilized for delivering content from the cloud to the edge of the network), IXPs (which allow networks to exchange traffic with one another in internet infrastaucture) as critical components for a successful data economy. The Recommendations present a detailed analysis of the concerns raised in the Consultation Paper and further provide an all-encompassing view of the potential requirements of the DC, CDN, and IXP sectors.

• • The Recommendations suggest the following steps be taken for the promotion of DCs in India:
    • • Data Centre Incentivization Scheme (“DCIS”) – The creation of the DCIS to establish DCs and DC Parks. The incentives will include fiscal and non-fiscal incentives from the Central Government. Further, the Recommendations suggest the creation of guidelines that will allow the States to provide fiscal incentives through their policies.
    • • The establishment National Single Window System (“NSWS”) specific to DCs for the following purposes –
        • • To maintain records, DCs will be mandatorily required to register on NSWS for the establishment of new DCs or DC Parks.
          • To provide time-bound single window clearances. Additionally, in the case of non-critical category permissions, NSWS may provide deemed approval after the lapse of defined timelines.
          • To act as a portal providing access to published notifications, the announcement of schemes. Benefits and FAQs, to interact and respond to questions from potential investors, and grievance redressal of existing and potential DCs/DC parks.
      • Data Centre Readiness Index (“DCRI”) – The Central Government will formulate and implement a centralized DCRI framework. This index will help in identifying and ranking states in accordance with their suitability to advance the DC sector. The parameters relevant for assessing the DCRI index will inter alia include statutory clearances such as giving separate recognition to DC/DC parks building infrastructure within the state, the performance of states in granting permission for the establishment of DC/DC parks on centralized online portal within specified timeline, Infrastructure related parameters, fiscal incentives such as capital and interest subsidy offered to DCs/DC parks, and power related incentives.
    • • Establishment of Data Centre Economic Zones (“DCEZ”) – The Recommendations also suggest identifying Special Economic Zones (“SEZ”) for the establishment of DC and DC parks based on the availability of power and water supply. However, in order to prevent the concentration of DCs in already developed locations, the Centre should help the establishment of DC Parks in states that are lagging in DCs.
    • • Application of trusted source procurement– The Recommendations, for Data Security purposes and to discourage introduction of insecure equipment in the network recommends that ‘trusted source procurement’ applicable for licensees under Section 4 of India Telegraph Act 1885, should also be made applicable for DCs for the security of sensitive equipment.
    • • Standards for the establishment of DCs – The Bureau of India Standards (“BIS”) should be entrusted with developing India-specific standards for the establishment of and framework for DCs.
    • • Establishment of the Data Digitization and Monetization Council (“DDMC”) – The Recommendations suggest the establishment of a statutory body called the DDMC to regulate data digitization, sharing, and monetization. The DDMC will also be responsible for implementing an overarching framework for the ethical use of data both by the government and corporates in India.
    • • Data Sharing – The implementation of data sharing and consent management framework should be in alignment with the Data Empowerment and Protection Architecture (“DEPA”) framework to provide telecom subscribers the option to share their KYC data with Telecom service providers while porting their numbers.
  • CDN – The Recommendations suggest that CDN entities should be registered with the Department of Telecommunications through a simple online registration process with a one-time registration fee of INR 10,000.

• IXP – The Recommendations suggest a separate authorization in Unified License for IXPs which is less burdensome than Internet Service Provide license authorization.

Our Take

The Recommendations are in line with the National Digital Communications Policy (NDCP-2018) that sought to use the transformative capacity of digital communication networks to empower the citizens of India. The aim of NDCP-2018 was to connect India, harness the power of emerging technologies such as Big Data, Cloud, IoT, etc., and secure the digital sovereignty of India by empowering individuals. Given the advent of 5G, IoT, and AI-based applications which will cause an increase in data usage, it becomes imperative to establish a strong and reliable infrastructure to help boost the Indian data economy. In this context, the Recommendations propose appropriate suggestions to aid the promotion of the DC, CDN, and IXP sectors. These suggestions will help in the creation of a stable infrastructure, increase investments, and accelerate the development of India’s data economy.

This article was first published on Srikrishna & Associates