Nippon Telegraph & Telephone (NTT) is planning large new investments in India’s data processing, renewable energy and communications infrastructure.
It is just the latest example of the Japan-India cooperation that is redrawing the economic map of Asia at the same time it affects security equations in the Indo-Pacific.
“We will invest US$500 million annually for the next four years in India,” says Sharad Sanghi, NTT India’s managing director and senior executive vice president for global data centers and marine cables, as quoted by the Press Trust of India.
“This is over and above the $800 million we have already infused in the last two years into ICT [information and communications technology] infrastructure.” The new money will be spent on data centers, solar power and submarine cable landing stations.
NTT is the largest operator of data centers in India, with 12 currently in operation and nine more planned. Their combined load capacity is scheduled to increase from 230 to 510 megawatts, according to Data Center Dynamics.
Three years from now, the company should have six data center parks around the country, two in Mumbai and the others in Noida (Delhi), Chennai, Bengaluru and Kolkata.
Earlier this month, construction began at the Bengal Silicon Valley Tech Hub in Kolkata, where NTT plans to build three new data centers. Operations are expected to begin in the middle of next year.
To help power the data centers, NTT India plans to add 350 megawatts (MW) to the 100 MW of installed solar power generation capacity it already has in India. The NTT Group Sustainability Charter calls for data centers to be carbon-neutral by 2030, achieved primarily through the use of solar power.
The original plan was for submarine cable landing stations to be built in Mumbai and Chennai, with construction to be completed this year. Now a third, in Kolkata, is reportedly being considered.
They will make it possible to connect the data centers to NTT’s MIST cable system linking India to Southeast Asia.
Beyond Singapore, other NTT submarine cable systems extend or will soon extend to Indonesia, the Philippines, Micronesia, Hong Kong, Taiwan, Japan and the US west coast.
Last October, the Indian government gave data centers with a minimum capacity of 5 MW official infrastructure status. The new classification makes them eligible for low-interest loans, which should make them more attractive investments.
Numerous Indian and foreign companies are investing in data centers in India. Besides NTT, global entries include American data center operators EdgeConneX, Amazon and Microsoft.
The Adani factor
Indian companies investing in the field include the Adani Group, which has recently been damaged by allegations of stock manipulation, money laundering and accounting fraud.
The Economist has gone so far as to call the allegations a test of Indian capitalism. More likely, it is a bump in the road for an economy that, following in the footsteps of East Asia, is upgrading and expanding its industrial economy at rapid speed.
Two years ago, in February 2021, Adani Enterprises, the flagship company of the Adani Group, and EdgeConneX announced the establishment of a 50:50 joint venture to build and operate data centers in India. Headquartered in Virginia, EdgeConneX has facilities in North and South America, Europe and Asia.
In November 2022, AdaniConneX announced the opening of Phase 1 of its data center project in Chennai. The joint venture is also building or planning to build data centers in Bengaluru, Hyderabad, Kolkata, Mumbai, Noida, Pune, and other cities in India. In June 2022, Adani Enterprises’ plan to establish a data center at Bengal Silicon Valley Tech Hub received government approval.
Whether or not, or to what degree, these projects will be delayed by debt reduction and postponement of investments forced on the Adani Group by the collapse of its share price remains to be seen. NTT might benefit from Adani’s troubles, but for now that, too, is unclear.
NTT’s growing data reach
Over the past several years, NTT has become a worldwide owner and operator of data centers. As of August 2022, the company had facilities at 93 sites in more than 20 countries, with 1,073 MW of capacity launched and 702 MW planned.
NTT Global Data Centers, the 100%-owned entity in charge of the business, is now estimated to be the world’s third- or fourth-largest data center service provider, with a market share in the mid-single digits. In recent years, it has been growing at an annual rate of more than 20% – much faster than the market average, according to most estimates.
Its largest presence is in Europe and Africa (UK, Germany, Netherlands, Switzerland, Austria, Spain, South Africa), followed by the US, Asia-Pacific (Japan, China, Malaysia, Singapore, Thailand, Vietnam, Indonesia), and India. But India is growing most rapidly and is poised to overtake both Asia-Pacific and Europe.
MIST (Myanmar/Malaysia India Singapore Transit) is being built by Orient Link Pte Ltd and NEC Corporation. Headquartered in Singapore, Orient Link is an NTT-led joint venture. Junior partners are the Fund Corporation for the Overseas Development of Japan’s Information and Communications Technology and Postal Services Inc (the Japan ICT Fund) and WEN Capital (formerly Optic Marine Gateway) of Singapore as junior partners. NEC is Japan’s top maker of telecom equipment and a world leader in submarine cables.
“In recent years, we have been supplying the majority of submarine cables in the region and this project enables NEC to continue contributing to advanced infrastructure for serving growing traffic demands,” said Atsushi Kuwahara, general manager of NEC’s submarine network division, which is working on the project with its local affiliate in India (NEC Technologies India Private Ltd (NECTI)).
Economic cooperation surge
Japan and India signed a Comprehensive Economic Partnership Agreement (CEPA) in 2011. Three years later, Japanese Prime Minister Shinzo Abe announced a 3.5 trillion yen five-year investment and financing commitment to India.
Last March, while visiting New Delhi, Japanese Prime Minister Fumio Kishida topped that with a 5 trillion yen five-year offer. That sum– $42 billion at the time, $37 billion at the current exchange rate – includes both public and private sector investments.
Japanese official development assistance (ODA) to India is broad-based, covering transport, electric power, water and sewage, agriculture and forestry and other areas, with about 70 projects currently being implemented according to the Japan International Cooperation Agency (JICA). Transport, which accounts for two-thirds of total loan commitments, includes urban, freight and high-speed railways, and roads.
Japanese private sector activities in India are also broad-based, covering electric power and gas, power generation equipment, engineering, steel, autos and electronics. Last October, Asia Times reported on Nippon Steel’s investment in India.
Nearly 1,500 Japanese companies are now registered in India, an increase of about 50% over the past decade. Almost certainly, NTT will not be the last Japanese company to make major investments in India.
The economic trend has strategic implications. David Arase, professor of international politics at the Hopkins-Nanjing Center of Johns Hopkins University SAIS, explains:
“Japan’s connectivity infrastructure investment in India is the most high-profile and maybe most lasting legacy of deceased prime minister Shinzo Abe’s quality infrastructure and free and open Indo-Pacific initiatives. It shows how infrastructure should be done and will do a lot to keep India’s interests aligned with the Quad.”
The Quad (short for Quadrilateral Security Dialogue) is a cooperative strategic arrangement among Japan, Australia, India and the US. Initiated by Abe in 2007, its purpose is to counter China’s military expansion and Belt and Road Initiative. The last summit meeting of Quad leaders was held in Tokyo in May 2022.
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