Cummins India Sees Good Opportunity In Data Centre Business

Power solutions provider Cummins India has said it is seeing a 'good opportunity' in data centre business, which is witnessing a significant boom driven AI adoption and data localisation.

A part of the US-based Cummins Inc, Cummins India Ltd is involved in the power generation, aftermarket, and export businesses with five manufacturing plants, assembly, and distribution facilities.

"Data centres have been a part of our portfolio for a while. We do see growth in data centres coming in India so we have an important role to play," Shveta Arya, managing director, Cummins India Ltd told PTI during an interaction.

These centres require 99.99% uptime for customers and they have different levels of providing backup power, she said.

"They have their own prime power electricity that comes to the grid or a substation then they use gensets for backup, which is very important for their operations to run at a 99.99%t uptime. So, we definitely see a play and an opportunity for us as the data centres grow in the India market," she said.

It may be noted that as much as 40% of the overall power generation revenue of Cummins India during the September quarter came from data centres. The remaining was across different segments.

"We also continue to see the data centre market slowly, steadily picking up," she had said last month during the post-Q2 earnings conference call.

According to a recent Macquarie Equity Research report, India's data centre capacity is expected to double based on under-construction capacity, and may increase five times by 2030 if pipeline capacity is fast-tracked.

As per the report, India has 1.4 gigawatt (GW) of operational data centre capacity, with around 1.4 GW under construction and another about 5 GW in the planning stage.

This would be bolstered by data localisation laws, enabling regulatory environment and subsidies from governments, and rising cloud adoption, among other tailwinds, it stated.

"If you look at the India market, the opportunity is really good because India has not been growing data centres at the pace at which the US or Europe (have been growing)," Arya said.

She, however, said Cummins India does not see the segment as the main growth driver for its business going forward.

"We have a very diversified portfolio... data centres will be a good growth driver (but) they may not be the main growth driver... We need to see the kind of data centres growth coming in the next few years for us to say it will be the main growth drive right," Arya said.

Today manufacturing, e-commerce, residential and commercial reality sector are growing at unprecedented rates in India, she said, adding that the way the government has come up with GST reforms 2.0 and PLI schemes and the level of private capex that is coming in, other industrial markets will also grow, she said.

"So, it's relative that if all segments are growing then it's difficult to say that data centres will be only the main source of growth. They definitely will be a very good opportunity for us, but we have yet to see how much that pace can be faster than any other segment," Arya added.