Responsible growth: India must ensure data centres are sustainable

India last year witnessed a surge in investment by global technology giants. Amazon committed more than $35 billion to India through 2030 across artificial intelligence (AI)-driven digitisation, exports, and job creation. Microsoft has announced $17.5 billion over four years for Cloud, AI infrastructure, and skilling, its largest investment in Asia, while Google is investing $15 billion to build in Visakhapatnam its biggest AI and data-centre hub outside the United States. Meta, meanwhile, has partnered with Reliance to build enterprise AI platforms and is exploring a 500-megawatt data centre in Andhra Pradesh. A large digital consumer base, low-cost data, and robust digital public infrastructure are driving such investments. Regulatory measures such as the Digital Personal Data Protection Act have strengthened perceptions of policy stability.

 

India’s data-centre industry is witnessing an increasing level of activity with facilities coming up in Mumbai, Chennai, Pune, Hyderabad, Bengaluru, the National Capital Region, and now Visakhapatnam. These centres are not just warehouses for servers; they are complex, energy-intensive facilities that require uninterrupted power, advanced cooling systems, fibre-optic connectivity, and subsea cable links to global networks. They significantly raise electricity and water demand. Thus, the design choices made in these early projects, around power sourcing, cooling technologies, and water reuse, will be a factor in whether India can scale up AI infrastructure without creating environmental problems. Google’s Vizag project, involving partners such as the Adani group and Bharti Airtel, illustrates how hyperscale investment can catalyse local ecosystems spanning renewable energy, telecom infrastructure, and specialised engineering services. The employment and capability effects are also significant. Google’s Andhra Pradesh hub alone is expected to generate nearly 180,000 direct and indirect jobs. Global capability centres (GCCs) are also evolving into hubs for innovation. According to EY’s GCC Pulse Report 2025, 92 per cent of leaders say GCCs now play a value-creation role, with generative AI increasingly deployed in customer service, finance, operations, and cybersecurity.

 

The fact that American firms are deepening their commitments despite recent United States-India friction reflects confidence in the country’s long-term trajectory and its strategic importance. India’s production of over 1.5 million engineering graduates annually and its share of more than 20 per cent of the workforce for global semiconductor design reinforce this appeal. The opportunity, however, comes with clear responsibilities. Data centres need to be preferentially located in regions where renewable power is abundant and grid integration is easier. Alternatives to water-intensive cooling, including air-based, liquid immersion, and closed-loop systems, need to be scaled up, particularly in water-stressed regions. Global best practices offer useful lessons in this context. Nordic countries run data centres on near 100 per cent renewable energy while repurposing waste heat to warm homes and buildings. It is also important to balance capacity by splitting demand between large hyperscale facilities and smaller data centres, reducing pressure on single locations. Sustained investment in skilling, higher education, and research & development will also be essential if India is to move up the AI value chain.