PhonePe Investing $200 Mn In Building Data Centres In India: CTO Rahul Chari

Amid a surge in payments volume in the country, payments giant PhonePe said that it is on its way to invest up to $200 Mn in building data centres across the country. 

Speaking to reporters at the launch of a data centre in Navi Mumbai, the startup’s chief technology officer (CTO) and cofounder Rahul Chari said that the investments were primarily driven by the regulatory insistence on data localisation, among other factors. 

He was quoted by news agency PTI as saying that the startup has already invested $150 Mn out of the total $200 Mn in setting up data centres. Without specifying a timeline, he added that the remaining $50 Mn would also be deployed to add more such facilities in the near future. 

At the same event, PhonePe’s chief reliability officer and cofounder Burzin Engineer said that the $150 Mn investment would enable the startup to scale up its overall capacity to more 14 megawatts across four facilities in Bengaluru and Navi Mumbai. 

As per the executives, the $150 Mn investment would shore up capacity to address higher transaction loads by the end of the current year. 

Elaborating further, Chari said that PhonePe was currently handling 120 Mn transactions per day (peak of 7,000 transactions per second), which was expected to surge to 200 Mn transactions per day by end of the year. 

PhonePe plans to ramp up its capabilities to process 500 Mn transactions per day by the end of next year. 

On what drove the company to invest heavily in data centres, the PhonePe CTO said that it was beneficial for the startup to invest in captive data centres given the data localisation mandate from the regulators. He also added that these models also offered flexibility of operations, compared to an operating expenses model.

The event saw the launch of a 4.8 MW data centre spread across 1,3740 sq ft. in Navi Mumbai’s Mahape. Incorporated in partnership with PhonePe, NTT and Dell Technologies, the startup claimed that the facility is the country’s first data centre with a smart cooling technology.

In September, UPI logged more than 678 Cr transactions with a cumulative value of INR 11 Lakh Cr. PhonePe continued its stranglehold over the market accounting for 47.4% of transaction count and nearly 50% of total transaction value. 

India’s Data Centre Evolution

Amidst growing demand for computing power and adoption of cloud services, India has been witnessing a steady growth in the number of such facilities established in the country. As a result a clutch of big names has also joined the lucrative space. 

From realty giant Hiranandani Group to conglomerate Adani Group, the space is witnessing intense competition as players look to grab a slice of the burgeoning industry. 

According to a report, India is currently home to 138 data centres spread across 11 Mn sq ft. with an installed capacity of 737 MW. A majority of these are based out of the country’s financial capital Mumbai and tech hub Chennai. 

The report estimates the number of data centres to surge to 183 by 2025, spread across 24 Mn sq ft. and 1,752 MW of total IT capacity.

While the demand has largely been the result of adoption of digital services in the post-pandemic world, what has also worked in favour of the industry has been government regulations. In the recent past, the Reserve Bank of India (RBI) has issued a flurry of mandates, directing payment processing companies to store the data of Indian customers on local Indian servers.

Fearing loss of access to one of the largest digital payments markets, many have set up local data centres to process such transactions. This has spawned a gradual interest in the Indian data centre market which has witnessed a sudden uptick in the past few years.

According to Statista, the revenue generated by the Indian data centre market hovered around $7.3 Bn at the end of 2021. This number is projected to surge to $9.27 Bn by the end of 2027.