India is preparing a dedicated policy for data centres as the government seeks to balance the country’s growing appetite for digital infrastructure with concerns over electricity consumption and its potential impact on consumers. Junior IT Minister Jitin Prasada announced the development on Wednesday, highlighting the need to ensure that the expansion of large-scale computing facilities does not translate into higher power bills for households and businesses.
Speaking at an event organised by the Central Electricity Authority in New Delhi, Prasada described India as a promising destination for hyperscale data centres. However, he cautioned against a situation in which the industry’s growing electricity requirements could place additional pressure on the country’s power supply.
“India is a very fertile ground for hyperscale data centres,” the minister said, adding that some countries had witnessed data centres drawing electricity away from consumers, ultimately increasing their power costs.
“We don’t want to get into that,” he added.
The minister did not disclose the proposed policy’s scope, specific provisions or expected release date. Nevertheless, the announcement signals the government’s intention to establish a more focused approach to regulating and supporting a sector that is becoming increasingly important to India’s digital economy.
Credits: Inshorts
India lacks a dedicated data centre framework
India currently does not have a dedicated national framework governing data centres. Instead, projects generally operate under existing environmental, construction and other applicable regulatory requirements, while individual states have introduced their own incentives to attract investments.
A dedicated policy could provide greater clarity for companies planning large-scale facilities, particularly as demand for computing capacity rises alongside cloud services, artificial intelligence and digital platforms.
Data centres house the servers and networking equipment required to store, process and transmit information. Their operations, however, require substantial amounts of electricity, while cooling systems can also place considerable demands on water resources.
As companies expand their infrastructure to support increasingly sophisticated AI applications, ensuring reliable and affordable electricity is becoming a critical challenge. India’s proposed policy could therefore become an important step towards aligning infrastructure development with broader energy priorities, although the government has yet to outline its approach.
Amazon and Google projects face local opposition
The policy announcement comes against the backdrop of growing resistance to major data centre projects planned by global technology companies in India.
Residents living near Amazon’s proposed site outside Mumbai have protested over concerns that the facility could strain local electricity and water supplies. Noise associated with the development has also emerged as an issue for nearby communities.
Meanwhile, Google’s proposed $15 billion project in Visakhapatnam has attracted criticism from environmentalists. Opponents have raised concerns about the project’s potential impact on wildlife and alleged improper use of temple land.
Both companies have denied wrongdoing, maintaining that the concerns surrounding their projects are unfounded. They have also pointed to advanced technologies designed to minimise resource consumption at their facilities.
These disputes highlight a challenge facing India’s data centre ambitions: attracting substantial foreign investment while addressing questions about environmental sustainability, local infrastructure and community welfare.
For policymakers, the task will involve ensuring that the benefits of new digital infrastructure do not come at the expense of communities living near these developments.
Data centres emerge as a $200 billion opportunity
Despite these challenges, data centres remain central to Prime Minister Narendra Modi’s broader strategy to position India as a global technology and investment hub.
Modi has invited companies worldwide to establish their digital infrastructure in the country, encouraging the global technology industry to make India a destination for storing and processing data.
The government views the sector as a $200 billion opportunity, reflecting its ambitions to attract investment, strengthen digital infrastructure and support the country’s expanding technology ecosystem.
India’s large digital consumer base and growing demand for cloud computing and AI services make it an attractive destination for infrastructure providers. However, sustained expansion will depend on more than investment incentives alone. Access to dependable electricity, efficient cooling systems, suitable land and supporting infrastructure will remain essential.
Credits: ET Datacenters
Balancing digital expansion with affordable electricity
The proposed data centre policy comes at a time when governments worldwide are grappling with the energy requirements of an increasingly digital economy. As AI adoption accelerates, the demand for computing power is expected to make energy planning an even more important consideration for technology infrastructure.
For India, the challenge is to capitalise on this investment opportunity without placing additional pressure on electricity consumers or local resources.
