Powering progress or draining resources?

India's digital economy is experiencing an extraordinary increase in data centre investments, establishing the country as a key location for global tech giants.

- MIHIR SHAH & SUNIL MANI

A notable example is Google's announcement to invest $15 billion over five years in an artificial intelligence (AI) data hub in Visakhapatnam, Andhra Pradesh.

India's data centre sector now has an IT load (total electricity consumed by computing equipment) exceeding 1.7 Gw, with an additional 2.5-3 Gw under development. STT Global Data Centres India manages 30 projects totalling 400 Mw, while Yotta Data Services operates three hyperscale sites with 434 Mw capacity.

NTT Communications and CtrlS Datacentres oversee 268 Mw and 250 Mw, respectively. Indian-owned companies such as Sify Technologies, Nxtra Data, and AdaniConnex contribute between 33 Mw and 200 Mw.

However, despite these investments, significant structural imbalances persist. India produces nearly 20 per cent of the world's data but accounts for only 3 per cent of global data centre capacity, creating a notable supply-demand gap. This has ignited intense competition among states, each offering fiscal incentives, land grants, and regulatory fast-tracks to attract large-scale facilities. The economic benefits are evident: Job creation, infrastructure upgrades, and technology spillovers transforming local economies.

The Data Centre Policy, 2020, established the framework for regulatory reforms and facilitating business operations, while the Hyperscale Data Centre Scheme launched in September 2021, with an allocation of ₹12,000 crore (approximately $160 million), aims to attract up to 3 trillion ($4 billion) in private investments over five years. Furthermore, the Union Budget 2022 granted infrastructure status to data and energy storage systems, enabling operators to access longer-term, lower-cost financing, positioning data centres alongside other critical infrastructure sectors.