The Indian government is preparing a national policy for data centers to address growing public resistance regarding water and electricity usage. Jitin Prasada, junior minister for electronics and information technology, announced the initiative on Oct. 14, describing the country as fertile ground for hyperscalers while aiming to prevent consumers from facing higher power costs due to competition with data center demand.
U.S. technology firms investing billions in Indian digital infrastructure face increasing scrutiny over environmental impact. Amazon's facility near Mumbai has encountered opposition from residents concerned about priority access to utilities during shortages. In Visakhapatnam, environmental activists have demanded the cancellation of permissions for Google's $15 billion AI data center project. While Google did not respond to requests for comment, Amazon stated it is committed to being a responsible neighbor and engages with communities through educational sessions. The company denied using water for cooling and asserted that its data centers do not draw electricity from the local distribution network serving homes and businesses.
Niti Aayog, the Indian government's think tank, recently shared a framework for local governments to evaluate data center projects based on grid readiness and water supply availability. The framework emphasizes establishing guidelines before constraints emerge, suggesting that faster approvals should be granted only when resource readiness and public value are proven. Jaspreet Singh, partner at Grant Thornton Bharat, noted that this approach marks a shift from primarily encouraging investment to balancing it with infrastructure readiness and sustainability.
Experts involved in consultations expect the new policy to provide clear approval guidelines that minimize risks from public pushback and simplify currently fragmented processes. Shobhit Agarwal, chief executive of real estate consultancy ANAROCK Capital, stated that India lacks a dedicated national policy for data centers, with projects currently approved under varying state-specific environmental and building rules. While the central government has offered 20-year tax incentives to attract hyperscalers, regional governments remain the final decision-makers for land, water, and power resources.
Nikhil Narendran, a partner at law firm Trilegal, observed that local governments often propose data center projects in locations already facing infrastructure constraints. He argued that state governments should identify sites with reliable electricity, substantial cooling infrastructure, water availability, and high-quality connectivity rather than competing to announce large investments.