India's burgeoning data center industry is rapidly transforming the nation into a global digital hub. With this growth, a significant opportunity emerges: to become a leader in the manufacturing of external storage devices. While India is becoming a prime location for storing the world's data, it still heavily relies on imports for external storage solutions like SSDs, pen drives, and portable hard disks. This dependence presents a compelling case for boosting domestic production to enhance economic growth, strengthen supply chains, and cater to unique local demands.

The Rise of India as a Data Center Hub

India's data center market is experiencing exponential growth, driven by increased digitalization, rising internet penetration, and government initiatives promoting digital infrastructure. This growth is further fueled by the adoption of AI, cloud computing, and IoT technologies, creating unprecedented demand for data storage and processing infrastructure. The Indian data center industry crossed the 1 GW milestone, growing at a robust pace of 24% CAGR since 2019. Experts project that India's data center capacity will reach 1.8 GW by 2027. To support this expansion, real estate demand of approximately 9.3 million sq. ft. is expected, with USD 5.8 billion towards digital and real estate infrastructure. By 2030, the market capacity across top seven cities is expected to cross 4,500 MW, attracting investments to the tune of $20-25 billion over the next 5-6 years.

Several factors contribute to India's attractiveness as a data center hub:

• Digital Transformation: The country's robust digital infrastructure is laying the foundation for a USD 1 Trillion digital economy.
• Data Localization: The implementation of the Digital Personal Data Protection Act and its accompanying rules is set to transform the data protection landscape, impacting colocation data center operators.
• Government Support: The government has been very supportive of the growth of the DC industry in India with various fiscal & non-fiscal incentives offered for data center investments in India.
• Growing Internet User Base: With 751.5 million internet users and a penetration rate of 52.4% in 2024, India's growing reliance on mobile internet and digital solutions has driven the expansion of data center networks to meet the rising demand for data processing and storage.

The Untapped Potential of External Storage Device Manufacturing

Despite the impressive growth in data center infrastructure, India heavily depends on imports for external storage devices. Devices like solid-state drives (SSDs), RAM modules, and USB flash drives are mainly produced in China, Taiwan, South Korea, and the US. This reliance on foreign suppliers creates vulnerabilities in the supply chain and limits value addition within the country.

Why India Should Lead in External Storage Devices

• Economic Benefits: Establishing a strong domestic external storage device manufacturing industry can create numerous jobs, attract investments, and boost the country's overall economic growth.
• Supply Chain Resilience: Local manufacturing reduces dependence on foreign suppliers, mitigating the risk of supply chain disruptions caused by geopolitical tensions, natural disasters, or other unforeseen events.
• Customization for Local Needs: Indian companies can design and manufacture storage devices tailored to local conditions, such as fluctuating power supply and extreme temperatures.
• Growing Demand: The demand for high-capacity drives will remain a key driver of HDD market growth, with a projected single-digit YoY increase by the end of 2025.
• Government Initiatives: The Indian government has launched several initiatives to promote electronics manufacturing, including the Production Linked Incentive (PLI) scheme and the Electronics Manufacturing Clusters (EMC 2.0) scheme. The ₹23,000-crore Electronics Components Manufacturing Scheme (ECMS) aims to boost domestic electronics production.

Challenges and Opportunities

While the potential is significant, India faces challenges in establishing a competitive external storage device manufacturing industry. These include:

• Lack of Core Component Manufacturing: India lacks large-scale manufacturing of core components like NAND flash or DRAM chips.
• Need for R&D and Innovation: Local brands need stronger R&D to compete globally and reduce reliance on foreign supply chains.
• Building a Robust Ecosystem: Developing semiconductor fabs and R&D centers will be crucial for sustaining growth in active component manufacturing.

To overcome these challenges and seize the opportunity, India needs to:

• Incentivize Core Component Manufacturing: Attract investments in NAND flash and DRAM chip manufacturing through targeted incentives and policy support.
• Promote R&D and Innovation: Encourage local companies to invest in research and development to create innovative storage solutions.
• Streamline Implementation of PLI Schemes: Ensure rapid and efficient implementation of the PLI scheme and other related initiatives.
• Develop Supporting Infrastructure: Invest in infrastructure development, including reliable power supply, logistics, and transportation networks.

By addressing these challenges and leveraging its strengths, India can transform itself from a data center hub to a global leader in external storage device manufacturing. This strategic shift will not only boost the economy but also strengthen India's position in the global technology landscape.