(Photo: Bloomberg)
(Photo: Bloomberg)

No takers for Telangana’s Data Centres Policy yet

  • Telangana, about 2 years ago, had come out with a Data Centre Policy to encourage and facilitate foreign companies to set up a required infrastructure
  • The state has not seen any major start-up success so far in spite of having created an ecosystem for them

Hyderabad: Anticipating the Centre’s stand on data localization (storage of data locally) of foreign software companies with offices in India, the Telangana government, about two years ago, had come out with a Data Centre Policy to encourage and facilitate foreign companies to set up a required infrastructure.

However, the state has so far failed to garner any interest on that front, in spite of a booming IT centre. It has also failed to see any major start-ups come up.

Last month, the US was reportedly considering caps on H-1B work visas for nations that force foreign companies to store data locally, after India’s draft e-commerce policy (which was out few months ago) laid out the clause for foreign companies in the country. The move however, did not go through, coming as major relief for cities like Hyderabad, where big names like Google and Microsoft have offices.

An official from the Telangana government, requesting anonymity, said the issue of data localization would have had an adverse impact with regard to major IT companies which did not want to share data, and was precisely the reason the state announced a Data Centre Policy in 2016. “The then IT minister (and now working president of the ruling Telangana Rashtra Samithi) K. T. Rama Rao wanted to be ready for any such change so we came out with it. No other state has it," he added.

However, no major foreign company has come forward to consider setting up its data centre in Hyderabad, because “storing data is cheaper outside currently. Big companies like Google and Facebook basically fear governments, hence they always bring up jurisdiction when asked to give information by any country, as their data is stored elsewhere," the official explained.

The official added that whenever the Centre makes data localization mandatory for foreign companies, Telangana will be ready. “We created this policy because when we heard that the Centre was planning the move. We should be the first ones to grab the opportunity as it is a rat race."

The state that set up the start-up incubator (which began as a co-working space initially in 2016) T-Hub in partnership with the Indian institute of Technology, Indian School of Business and National Academy of Legal Studies and Research, has also not seen any major start-up success so far in spite of having created an ecosystem for them.

“Industry practices are changing globally. With the trade war between China and the US and India pushing for a trillion dollar digital market, Telangana can play a major part if there are successes from here. It needs to attract more talent in terms of startups. The state is also going in the right direction by having a Data Centres policy," said independent researcher and data analyst Srinivas Kodali.

The creation of T-Hub has also led to other incubators being established in the state, which has a proper ecosystem in terms of infrastructure, support and skill development. However, Bengaluru continues to be the preferred destination. “Bengaluru has a first mover advantage, and also venture capitalists are in that city. Telangana is the only place which has a comprehensive system for startups however today," said the official, adding that the government was hoping for a few major success stories going ahead.

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