AI Startup RackBank Cuts Data Centre Costs by 50% with Indore and Raipur Land Deals

Mumbai-based AI infrastructure startup RackBank has announced its strategic expansion into tier-2 cities, securing substantial land acquisitions in Indore and Raipur to develop cost-effective data centres. The company revealed that operational costs in these locations could be reduced by 2-3 times compared to traditional data centre hotspots like Mumbai, Chennai, and Noida.

Strategic Land Acquisitions Drive Expansion Plans

The firm, which recently launched its AI cloud business unit called Neev-Cloud, has successfully acquired six acres of land in Indore designated for an 18-megawatt facility. Additionally, the company secured 13 acres in Raipur for a significantly larger 100-megawatt facility, as disclosed by Narendra Sen, founder and CEO of RackBank and NeevCloud, in his statement to ET.

These strategic investments are receiving substantial support from the respective state governments of Madhya Pradesh and Chhattisgarh through power subsidies and various operational benefits. The move aligns with the broader tier-2 cities development trend that has been gaining momentum across India's real estate landscape.

Cost-Effectiveness Drives Tier-2 City Strategy

Sen explained that to maintain competitive pricing for on-demand GPUs (graphics processing units), neocloud firms must significantly reduce both fixed costs and operational expenses. This need becomes particularly critical considering that GPUs consume immense amounts of power and water resources.

The cost differential between tier-1 and tier-2 cities proves substantial for data centre development. According to Sen's analysis, establishing infrastructure in tier-1 cities requires approximately ₹50 crore per megawatt, while the same capacity can be developed for ₹25 crore in tier-2 locations. This cost advantage is further enhanced by state government support, including single window clearances and dedicated power supply arrangements.

State governments like Madhya Pradesh are actively supporting data centre companies through streamlined approval processes and infrastructure benefits, making these locations increasingly attractive for major data centre investments.

AI Infrastructure Market Expansion

The expansion reflects the growing demand for AI infrastructure services across India. RackBank's strategic positioning in tier-2 cities indicates a broader industry shift toward optimizing operational costs while maintaining service quality. This approach mirrors similar strategies adopted by other technology giants who have been investing in India's data centre infrastructure.

The development also supports the broader narrative of tier-2 cities emerging as investment destinations across various sectors, including technology infrastructure and real estate development.