An ASEAN answer for India’s data centre push

Core Insights - The global digital economy is rapidly expanding, driven by artificial intelligence, cloud computing, and data-intensive services, leading to increased demand for data centres [1] - Malaysia is emerging as a leading data centre hub in Asia, expected to surpass India in capacity by 2029, despite India's advantages [1][2] Malaysia's Rise - Malaysia attracted approximately $43 billion in data-centre investments from 2021 to 2024, with an annual growth rate of over 22% in installed capacity [2] - Johor has transformed from a palm-oil plantation area to a global AI-infrastructure hotspot, benefiting from demand spillover from Singapore [2][4] - The country has streamlined power planning and approvals, reducing the time for power approvals from 3-4 years to about 12 months [4] Policy and Regulatory Framework - Malaysia's policy coordination includes predictable frameworks for incentives, permitting, and infrastructure, with a Data Centre Task Force established in 2025 to harmonize approvals [5][6] - A Sustainable Data Centre Framework is being developed to enforce energy and water efficiency standards, with a target of 31% renewable energy by 2025 [6][7] India's Position and Challenges - India has the second-largest data-centre capacity in Asia, projected to reach 4,500 MW by 2030, driven by strong demand fundamentals [8] - Despite favorable policy intent, execution remains a challenge, with long approval timelines for land and utility connections [9][11] - Power supply is a significant bottleneck, with data centres projected to consume 3% of India's power by 2030, facing hurdles in securing long-term green power [10] Competitive Landscape - India's data-centre growth is influenced by state-level initiatives, with Maharashtra and Tamil Nadu facing saturation, while Telangana and Andhra Pradesh offer competitive advantages [12] - Malaysia's success highlights the importance of prioritization, sequencing, and stability in planning and execution [13] Recommendations for India - India should implement tiered sustainability standards and ensure power certainty through early-stage grid access and renewable energy commitments [14][15] - Unified planning and site-zoning rules are necessary to streamline approvals and minimize conflicts [15] - Establishing a multi-stakeholder task force is critical for coordinating planning, grid expansion, and water management [15] Conclusion - India's opportunity in the data centre sector is significant but requires improved execution to compete effectively against Malaysia and other emerging markets [16]