Hello, this is Priyanka Salve writing from Singapore.
Welcome to the latest edition of Inside India. A one-stop-shop for the stories and developments of the world’s fastest growing large economy.
India has been touted as one of the hottest markets for data centers, with several US big tech companies investing in building capacity in the country. But recently, some projects have faced public backlash over the use of water and power resources.
The Indian government is currently taking steps to address this situation. Will it work?
Do you have any thoughts on today’s newsletter? Share them with the team.
Several American Big Tech companies, which are spending billions of dollars to build digital infrastructure in India, are facing growing public anger over resource sharing and environmental concerns, prompting government intervention to defuse tensions.
On October 14, Electronics and Information Technology Secretary Jitin Prasada announced that India will roll out a data center policy, saying the country is a “fertile ground for hyperscalers.”
The minister reportedly said that India wants to avoid a situation where consumers have to pay higher prices for electricity because they have to compete with data centers for supply.
Data center companies are facing a global public backlash as local communities raise concerns about power, water and land access. India is also grappling with similar issues that threaten its ambitions to host the world’s data.
Amazon’s data center near Mumbai is facing resistance from residents concerned about the company’s facilities having priority access to water and electricity during water shortages, local media reports said.
Meanwhile, environmental activists are demanding the cancellation of a permit granted to an AI data center in Visakhapatnam, where Google is building a $15 billion project.
Amazon told CNBC that it is committed to being a “good, responsible neighbor” and is engaging with the community through educational sessions. They deny using water for cooling, adding that their data centers “are not powered by the local electrical grid that provides power to homes, stores, and businesses.”
The company also said it will be “part of industry discussions with the government to advise on data center regulations in India.”
google He did not respond to CNBC’s request for comment.
Experts told CNBC that the government plans to roll out policy directives across the country to quell local resistance to some projects.
It will also establish clear approval guidelines to minimize the risks data center developers face from public backlash and implementation challenges.
policy change
Jaspreet Singh, a partner at Grant Thornton Bharat, told CNBC that the proposed policy marks a shift from “primarily encouraging investment in data centers” to balancing infrastructure and sustainability aspects.
Niti Aayog, an Indian government think tank, last week shared a framework for local governments to assess the sustainability of data center projects and provide suitable locations based on grid readiness and water supply availability.
The report emphasized the need to establish guidelines “before constraints emerge,” adding that data centers should only receive expedited approval if resource readiness, local safety measures, and public value are demonstrated.
Experts participating in the consultation hope the new policy will set out clear and consistent rules, which will also help the industry overcome challenges around land acquisition and simplify the fragmented approval process.
“India does not have a dedicated national policy on data centers and it is time to address this gap,” Shobhit Agarwal, CEO of real estate consultancy Anarock Capital, told CNBC.
He explained that currently projects are approved based on existing environmental and building regulations, with each state having its own “variations and incentives.”
While the Indian government has enthusiastically welcomed hyperscalers’ investment in Indian data centers and even given them a 20-year tax holiday, local governments are the final arbiters of land, water and power resources.
Nikhil Narendran, a technology partner at law firm TriLegal who works with big tech companies in the US, said local governments are already proposing data center projects in places facing power, water and other infrastructure constraints.
He added that state governments should be encouraged to identify locations with reliable power, substantial cooling infrastructure, water availability and high-quality connectivity, “rather than simply competing to announce large investments”.
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